A week in politics

[Rzar]

The problem is at the minute, working people can't achieve anything by working. Too many people are working just to live.

Even average earners have a very slim chance of owning a house, so they have no chance of generating wealth. They really do have to sort the housing situation out.

Pensioners are some of the richest and some of the poorest in society. You’d think there would be a way to means test this triple lock to make it more palatable.

This week the government have been adamant that workers can’t expect big wage price rises as it will push up costs and cause even more inflationary problems yet here we are doing exactly that for a huge core of their voters.

Anyway, what a mess at the moment!

All down to personal experience obviously and which ones you know. But the pensioners I know will either have wealth, or will not have that much wealth but will own property, so they would sell that to live out retirement. The problem at the moment is, those that won't have much in future have no chance of owning a house - so will find it even harder to fund their retirement.

I know I am a bit of a broken record in terms of housing but I really do feel it's a massive problem that they aren't addressing, or showing any intention of doing. And with labour costs ridiclous at the moment, I would bet the problem is only gonna get worse as the cost to build houses is going up massively.

 

[MaxiRobriguez]

The problem is at the minute, working people can't achieve anything by working. Too many people are working just to live.

Even average earners have a very slim chance of owning a house, so they have no chance of generating wealth. They really do have to sort the housing situation out.



All down to personal experience obviously and which ones you know. But the pensioners I know will either have wealth, or will not have that much wealth but will own property, so they would sell that to live out retirement. The problem at the moment is, those that won't have much in future have no chance of owning a house - so will find it even harder to fund their retirement.

I know I am a bit of a broken record in terms of housing but I really do feel it's a massive problem that they aren't addressing, or showing any intention of doing. And with labour costs ridiclous at the moment, I would bet the problem is only gonna get worse as the cost to build houses is going up massively.

Owning your own home shouldn't have to be people's primary goal. In Europe, vast majority of people rent.

Renting isn't a dirty word. Everyone renting wouldn't be a problem. There are sunk costs you have to put into homeownership that you don't have to pay for as a renter - things like your boiler breaking. Renting is only a problem for the current generation because cost-of-living is high but more importantly because pension provision is practically non-existent, which makes retirement impossible if there is still a large outgoing to cover rent.

The elephant in the room is lack of pension provision. We're coming to the end of the DB scheme era for people close to retiring. They will be fine. It is within the next ten years when those on DC pensions, who think they've done a good job generating a pot of £100k, get told by a financial advisor that they can only withdraw £300 a month if they don't want to run out of money before they die.

 

[GOBIAS]

The problem is at the minute, working people can't achieve anything by working. Too many people are working just to live.

Even average earners have a very slim chance of owning a house, so they have no chance of generating wealth. They really do have to sort the housing situation out.



All down to personal experience obviously and which ones you know. But the pensioners I know will either have wealth, or will not have that much wealth but will own property, so they would sell that to live out retirement. The problem at the moment is, those that won't have much in future have no chance of owning a house - so will find it even harder to fund their retirement.

I know I am a bit of a broken record in terms of housing but I really do feel it's a massive problem that they aren't addressing, or showing any intention of doing. And with labour costs ridiclous at the moment, I would bet the problem is only gonna get worse as the cost to build houses is going up massively.

Great post mate. You are absolutely right to keep banging on about housing as it has caused so many issues.

We were lucky that my age group (I’m 41) have kind of been jammed in the middle so better position than the 20-35 age group but obviously behind the older group. I really feel for younger gen. Things have got so much we harder in the last decade.

The thing is I know from ourselves and friends who chose not to have more children due to affordability which all knocks on further down the line. The next gen may not leave home until 30’s so may not have kids at all. The current system for working people isn’t a family friendly environment and those gaps have been easily plugged pre brexit. Now those gaps are going to start showing badly.

 

[Project Zeus]

So Sunak keeps the triple lock on pensions two days before Tiverton by election.

What a coincidence.

I hope they get a stuffing in both today.


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Bribing pensioners while the rest of us struggle to pay for them is the Tory MO.

Help pay for it with a tax on land ownership. These people have profited from the value skyrocketing over the last 5 decades, it's time they help us out for a change.

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[GOBIAS]

Owning your own home shouldn't have to be people's primary goal. In Europe, vast majority of people rent.

Renting isn't a dirty word. Everyone renting wouldn't be a problem. There are sunk costs you have to put into homeownership that you don't have to pay for as a renter - things like your boiler breaking. Renting is only a problem for the current generation because cost-of-living is high but more importantly because pension provision is practically non-existent, which makes retirement impossible if there is still a large outgoing to cover rent.

The elephant in the room is lack of pension provision. We're coming to the end of the DB scheme era for people close to retiring. They will be fine. It is within the next ten years when those on DC pensions, who think they've done a good job generating a pot of £100k, get told by a financial advisor that they can only withdraw £300 a month if they don't want to run out of money before they die.

But buying (despite huge costs) is still preferable to renting which is an astronomical cost with no end goal or benefit or asset. I know you know this but the idea of squandering thousands a year is just depressing to people.

 

[Rzar]

It's about the option.

I don't think renting is bad. I do think paying more in rent than you would a mortgage is.

You get turned down for a mortgage because you won't be able to repay the amount they say, and the cheapest option to rent is significantly higher than the amount they say you can't pay. So people get trapped, with no alternative.

 

[Lefkasman]

Great post maxi. If everyone has to shoulder the burden then fair enough. Some pensioners are horrendously poor. But many are in a great position. It isn’t black or white but it is so unjust that well off pensioners are gonna get such a rise while working families are hit struggling and are hit time and time.

I know loads of pensioners who used to get by on their pension. Not anymore they don't. I'll agree some do seem extremely comfortable.
The idea of me getting my own transport at the moment is a pipe dream. If I could afford a second hand car whose prices have rocketed I certainly couldn't afford to run it. Where I live there's no dentist the nearest being Louth and there are only 3 buses a day there.
I have to go to a vets in Sutton with George as the ones here wouldn't accept him and he can't walk that far anymore. The whole thing is a shambles and the typical Tory plan of divide and rule seems to be working.
We do have some transport though.

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[GOBIAS]

I know loads of pensioners who used to get by on their pension. Not anymore they don't. I'll agree some do seem extremely comfortable.
The idea of me getting my own transport at the moment is a pipe dream. If I could afford a second hand car whose prices have rocketed I certainly couldn't afford to run it. Where I live there's no dentist the nearest being Louth and there are only 3 buses a day there.
I have to go to a vets in Sutton with George as the ones here wouldn't accept him and he can't walk that far anymore. The whole thing is a shambles and the typical Tory plan of divide and rule seems to be working.
We do have some transport though.

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Honestly mate I’m not having a go at pensioners per se. I know it is a struggle for so many and nobody wants to lose money. You are right though that divisive politics isn’t helping but they have managed to achieve it and are pitching people against each other in a ridiculous way. People who should be supportive bedfellows are against each other. Rail workers v nurses. Nurses v Forces. Pensioners v working families etc….

Are you in Mablethorpe mate?

 

[Col]

Sadly they do now mate. Not traditionally but there is this new breed in areas like where I live who have been sucked in to this Johnson version of the Tories.

It's true! "Ooh, I just don't like that Keir Starmer". Doesn't mean you have to vote Johnson though, does it?!

My parents voted Tory after having been Labour supporters for many years. They also voted Brexit. I don't talk politics with them anymore.

 

[Lefkasman]

Honestly mate I’m not having a go at pensioners per se. I know it is a struggle for so many and nobody wants to lose money. You are right though that divisive politics isn’t helping but they have managed to achieve it and are pitching people against each other in a ridiculous way. People who should be supportive bedfellows are against each other. Rail workers v nurses. Nurses v Forces. Pensioners v working families etc….

Are you in Mablethorpe mate?

No I didn't think you were. Yes I'm in Mabo now. It's ok, nice and quiet on the outskirts.

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[GOBIAS]

No I didn't think you were. Yes I'm in Mabo now. It's ok, nice and quiet on the outskirts.

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I do like it out there, away from Skeggy / mabo main drag it is a nice pace of life and locals friendly.

 

[Fitzcarraldo]

Hey Lefkas. Good to see you back. In case you'd forgotten in your time away:

https://www.tiktok.com/video/7086567774348119302

 

[MaxiRobriguez]

But buying (despite huge costs) is still preferable to renting which is an astronomical cost with no end goal or benefit or asset. I know you know this but the idea of squandering thousands a year is just depressing to people.

The data is somewhat inconclusive actually, believe it or not.

What matters most in terms of dictating whether it's better to buy or better to rent is accessibility to high-loan-to-value ratios. If you can get a 100% mortgage then yes, over time it is better to buy than rent.

But if you're having to save years to fund a deposit, then an alternative approach could be to deploy that money into stock markets and see real returns compound over many years, using that compounding to pay for a life time of rent.

Over the very very very very very long term house prices track inflation. There are periods of excessive growth, which we've seen for two decades now, and periods of when they are cheap as chips, like in the 70's/80's, but overall the trend is in line with inflation. Stocks meanwhile tend to beat inflation annually by about 4-5% on average.

Here's a good video on renting vs owning and why it's not particularly clear cut:

 

[Captain Sinister]

I have to come clean here:
1 I have several DB pensions from my working life, all of which are index linked to either RPI or CPI;
2 My State Pension is the strawberry jam, clotted cream and glass of champagne on top of my occupational pensions (the income from which just about cover my rather modest living style);
3 As an "older person" and one who hailed from a council house living, blue-collar family, I can honestly say other than a brief flirtation with the Tories under the early days of Thatcher, I have never voted Tory; rather than vote for a party candidate I have always considered the best candidate for the constituency, with a secondary eye to the manifesto of my preferred candidates party affiliation;
4 I do not need a 10% hike in my State Pension; it isn't going to change my life, and it certainly isn't going to make me vote Tory any time soon (ever), however, no-one in government thought to ask me whether I had need of the 10%.
5 Will I donate the 10% to charity? Possibly, but as I already have a charity donation budget, I shall not donate all of it.
There was a simple solution to the pension triple lock situation (yes, you can complicate it with all sorts of crafty personal financial engineering), and that would be to only award the inflation bit to pensioners in receipt of State Pension top up.
This would be seen by the Tories as pandering to the ne'er-do-wells in society, who the Tories would accuse of wasting the opportunities of education and full-employment, and reduce the potency of the bribe factor.

 

[Strummer]

Owning your own home shouldn't have to be people's primary goal. In Europe, vast majority of people rent.

Renting isn't a dirty word. Everyone renting wouldn't be a problem. There are sunk costs you have to put into homeownership that you don't have to pay for as a renter - things like your boiler breaking. Renting is only a problem for the current generation because cost-of-living is high but more importantly because pension provision is practically non-existent, which makes retirement impossible if there is still a large outgoing to cover rent.

The elephant in the room is lack of pension provision. We're coming to the end of the DB scheme era for people close to retiring. They will be fine. It is within the next ten years when those on DC pensions, who think they've done a good job generating a pot of £100k, get told by a financial advisor that they can only withdraw £300 a month if they don't want to run out of money before they die.

One other crucial thing in the U.K. is that currently, renters can get absolutely shafted with very few protections and can be either turfed out on a whim or can have ridiculous rent increases imposed on them.

In certain European countries rental market is much more pro-tenant, and there are local organisations in every district known as Mieterverein, which support tenants by providing advice and legal services (to join, it costs me €86 a year).

Contracts for renters have to be in a specific format and must contain various legally binding clauses, and there are large amounts of clauses protecting tenants from eviction or early termination of the lease (typically in Germany, you sign a contact for a minimum rental term, which is usually two years, and the contract is then open ended, and tenancy can only be ended with the agreement of both landlord and tenant).

Any rent increase is controlled by figures set by the local government based on average rental prices. My rent is, for example, going up in August, in part, according to my very pleasant landlady, of the increase in utility costs.

My new rent is €5 per month higher than currently.

 

[GOBIAS]

The data is somewhat inconclusive actually, believe it or not.

What matters most in terms of dictating whether it's better to buy or better to rent is accessibility to high-loan-to-value ratios. If you can get a 100% mortgage then yes, over time it is better to buy than rent.

But if you're having to save years to fund a deposit, then an alternative approach could be to deploy that money into stock markets and see real returns compound over many years, using that compounding to pay for a life time of rent.

Over the very very very very very long term house prices track inflation. There are periods of excessive growth, which we've seen for two decades now, and periods of when they are cheap as chips, like in the 70's/80's, but overall the trend is in line with inflation. Stocks meanwhile tend to beat inflation annually by about 4-5% on average.

Here's a good video on renting vs owning and why it's not particularly clear cut:

I think a lot of it is mentality though maxi. You pay away at your mortgage but you know that at the end of it all you have that asset, that is a great mental comfort for people and gives them a reason to plug away. Even if financially it may be close, most people won’t wisely use any potential benefits of renting to their benefit. They will just be left 30 years down the line with nothing to show for all the tent they have churned out.

 

[MaxiRobriguez]

I think a lot of it is mentality though maxi. You pay away at your mortgage but you know that at the end of it all you have that asset, that is a great mental comfort for people and gives them a reason to plug away. Even if financially it may be close, most people won’t wisely use any potential benefits of renting to their benefit. They will just be left 30 years down the line with nothing to show for all the tent they have churned out.

Yeah fully agree. For most people, owning a home does make sense, but for those with a bit of knowledge and discipline, renting isn't a black hole of cash that people make it out to be.

I'm considering going from owning to renting for our next place. We'd like to move to a bigger place with better schools but the jump is likely to be £200k+ on the mortgage with no ability to release any of the equity as it all needs to be tied up to get said mortgage. Alternatively can sell up here, take the reasonably large amount of equity we've build up here and deploy it in markets.

NB: I'm only a home-owner because my parents pushed it on me for reasons discussed (renting is throiwng cash away). I've only changed my opinion on it in the last couple of years.

 

[alabamared]

One other crucial thing in the U.K. is that currently, renters can get absolutely shafted with very few protections and can be either turfed out on a whim or can have ridiculous rent increases imposed on them.

As a landlord I have to take issue with that. Currently you cannot take action against a non paying renter until they are 60 days in arrears and after that formal notices have to be issued and the whole process to evict a non paying tenant can take close to a year. During which time you are still responsible for the maintenance and upkeep of the property. This process also costs a lot in legal fees. Under the new deposit rules (which effectively puts the deposit in escrow) the chances of recovery a costs for damage caused is next to didley squat.
Personally I keep rent rises to inflation level as do most landlords, the 'outrageous' rises you hear about are mostly outliers. Big rises can occur when there is a change in tenants and the rent is adjusted to current market levels.

 

[Tiff]

this Johnson version of the Tories.

It’s called UKIP


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[Strummer]

As a landlord I have to take issue with that. Currently you cannot take action against a non paying renter until they are 60 days in arrears and after that formal notices have to be issued and the whole process to evict a non paying tenant can take close to a year. During which time you are still responsible for the maintenance and upkeep of the property. This process also costs a lot in legal fees. Under the new deposit rules (which effectively puts the deposit in escrow) the chances of recovery a costs for damage caused is next to didley squat.
Personally I keep rent rises to inflation level as do most landlords, the 'outrageous' rises you hear about are mostly outliers. Big rises can occur when there is a change in tenants and the rent is adjusted to current market levels.

A landlord? BURN HIM!

But in all seriousness, yes, You’re doing it right, but we’ve seen horror stories of tenants thrown out (or persuaded to leave by ridiculous rent increases) and then cannot find anywhere else to rent in the same area as it’s too expensive, so they need to relocate and if there are parents, uproot their kids from school.

The U.K. could do far better for tenants than it does, currently.

And I say that as a beneficiary of a much better regulated rental market.

 

[Rzar]

Yeah fully agree. For most people, owning a home does make sense, but for those with a bit of knowledge and discipline, renting isn't a black hole of cash that people make it out to be.

It is if you are living paycheck to paycheck.

Like I say, if people want to rent then fine.

But the housing market needs fixing because the option to buy just isn't there for the majority of the population. I don't fancy paying somebody elses mortgage when I could be paying for my own, even if it will cost me a few extra quid.

 

[MaxiRobriguez]

But the housing market needs fixing because the option to buy just isn't there for the majority of the population. I don't fancy paying somebody elses mortgage when I could be paying for my own, even if it will cost me a few extra quid.

Both the "paying someone elses mortgage" and the concept of home ownership making people happy was covered in the video I linked.

It's really worth a watch, honestly, and that's not for one second to take away from the difficulties younger people are facing in the housing market (I know it too, hence the looking at renting next place, because we cannot afford to get what we want despite both me and partner earning far in excess of average family take home, so I have a lot of sympathy with those on lower incomes and/or saving first their first home).

 

[Captain Sinister]

One other crucial thing in the U.K. is that currently, renters can get absolutely shafted with very few protections and can be either turfed out on a whim or can have ridiculous rent increases imposed on them.

In certain European countries rental market is much more pro-tenant, and there are local organisations in every district known as Mieterverein, which support tenants by providing advice and legal services (to join, it costs me €86 a year).

Contracts for renters have to be in a specific format and must contain various legally binding clauses, and there are large amounts of clauses protecting tenants from eviction or early termination of the lease (typically in Germany, you sign a contact for a minimum rental term, which is usually two years, and the contract is then open ended, and tenancy can only be ended with the agreement of both landlord and tenant).

Any rent increase is controlled by figures set by the local government based on average rental prices. My rent is, for example, going up in August, in part, according to my very pleasant landlady, of the increase in utility costs.

My new rent is €5 per month higher than currently.

My duaghter rents in Leicester.
She signed a 12-month contract in September '21.
In March she had a letter telling her her contract was not 12 months, but was a student let, expiring in July.
She fought that one off, but then got a letter telling her that come renewal it would be 10 months fromSeptember '22, and that rent would be increased by11%, take it or leave it.

 

[Strummer]

My duaghter rents in Leicester.
She signed a 12-month contract in September '21.
In March she had a letter telling her her contract was not 12 months, but was a student ley, expiring in July.
She fought that one off, bu then got a letter teklling her that come renewal it would be 10 months fromSeptember '22, and that rent would be increased by11%, take it or leave it.

See this is a classic example, and something that would never be legally allowed where I live.

 

[MaxiRobriguez]

See this is a classic example, and something that would never be legally allowed where I live.

It won't be legal here if there is a contractual obligation which covers 12 month's of rent at £X per month with no clauses around inflation.

If you're certain the contract says that then just tell her not to leave/pay more, citing the contract, and tell the landlord to take it up with the courts if he/she disagrees.