How high will inflation go ?
- Thread starter Justin Smith
- Start date
- Original Poster
- #643
This is a bit worrying....To paraphrase Pastor Martin Niemöller :
First they came for the landlords
And I did not speak out
Because I was not a landlord
Then they came for the homeowners
And now I am in the crap
I checked the EPC for my mother in laws house.
It's a 1960 semi.
It only got a D rating despite having cavity wall insulation, 100mm loft insulation, a condensing boiler and being fully doubled glazed ! i.e. it would fail the C rating ! !
| Wall | Cavity wall, filled cavity | Good |
|---|---|---|
| Roof | Pitched, 100 mm loft insulation | Average |
| Window | Fully double glazed | Average |
| Main heating | Boiler and radiators, mains gas | Good |
| Main heating control | Programmer and room thermostat | Average |
| Hot water | From main system | Good |
| Lighting | Low energy lighting in 8% of fixed outlets | Very poor |
| Floor | Suspended, no insulation (assumed) | N/A |
| Secondary heating | Room heaters, mains gas | N/A |
One wonders if it might pass if all the lighting was swapped for "low energy" types. But, in the case of a rental property, that's surely down to the tenant to buy and/or replace the bulbs with LED types ? ! ?
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From https://www.london-epc.co.uk/will-lighting-affect-epc-rating/
So what difference does it make to the final rating? In the average domestic property, going from old lighting to new energy efficient lighting throughout the property will only improve the energy rating by 1 or 2 points. That is not to say that it isn’t worth doing! A single point can make the difference between a C and a D rating for example, and the savings per bulb mean that the payback time is actually very short. It makes sense to get it done, but if you are trying to boost your EPC rating, you will have to do something more.
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The savings rate isn't climbing as high as interest though, with inflation on top, your savings are losing money?
Unless you have lots of investments?
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No guarantee they will go down, interest rates have been artificially low for too long.
Take a look at what happened in Eire re rent controls.
”Government measures to control rents have backfired and in many cases have led to an increase in rents, a new report has claimed.
Report claims rent controls have backfired and worsened crisis
Study claims rent pressure zones have added to rent pressureswww.irishtimes.com
Maybe Lisa Nancy is a forum member, because Labour have just dropped the whole idea of rent controls, after pushing for them up to now. Even Labour can see too many landlords leaving the marketplace.
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Isn't it the same in certain parts of the US? Rent controls have caused all manner of issues, making the situation even worse. They abandoned it all in the 90's but have started bringing it back, just repeating the same mistakes in a cyclical way every 20 to 30 years and hoping for a different result.
We need more homes, to bring the cost down but I disagree with the way they're going about it. They're building the wrong homes, in the wrong places, for the wrong people. Not everyone needs a garage and a garden, not everyone has a family or two incomes coming in. Unfortunately, nobody cares, they're just going to keep building identikit housing estates and overload the local roads with traffic, sewage problems and failure to build more amenities. Maybe they all need a copy of SimCity to play on, before they're let lose on planning laws?
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not getting garages and private lawns around here
In the last couple of months i have helped my daughter hand out flyers for a local music festival (so she gets free tickets for her and friends). Doing that i have traipsed around a lot of the new estates (on my advice she managed to secure delivering to them as the density is so high she could leaflet 300 per hour)
estates like this https://goo.gl/maps/t9vcGLn9ThnKALHHA, that number 9 which in my view is a 3 story end of terrace town house, sold as a semi for £520k in March - parking is through the archway to car park behind which takes the place of decent gardens.
There are hundreds of houses like that (in fact thousands) few cheaper and many more expensive with minimal school provision the odd co-op a nasty new pub and other than estate roads no real infrastructure improvements
In the last couple of months i have helped my daughter hand out flyers for a local music festival (so she gets free tickets for her and friends). Doing that i have traipsed around a lot of the new estates (on my advice she managed to secure delivering to them as the density is so high she could leaflet 300 per hour)
estates like this https://goo.gl/maps/t9vcGLn9ThnKALHHA, that number 9 which in my view is a 3 story end of terrace town house, sold as a semi for £520k in March - parking is through the archway to car park behind which takes the place of decent gardens.
There are hundreds of houses like that (in fact thousands) few cheaper and many more expensive with minimal school provision the odd co-op a nasty new pub and other than estate roads no real infrastructure improvements
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Warned private landlords leaving the UK scene, with large institutions likely to increase their holdings, as if on cue…. https://www.thisismoney.co.uk/money...A1phmH7rmbq8FV8iGQPoFclr3dMahqhGo#prth49b77wk
Anyone who believes the banks are going to be nice landlords, in comparison to average people before, get ready for a reality check.
Anyone who believes the banks are going to be nice landlords, in comparison to average people before, get ready for a reality check.
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- Original Poster
- #656
The Times 3Jul 23 p31
Jim Ratcliffe blames Sunak for high inflation
The chemical's tycoon Sir Jim Ratcliffe has singled out Rishi Sunak's furlough system as a reason for the UK's persistent inflation, claiming the prime minister "gave away money like confetti".
Sir Jim is right, but is a little unfair to blame just Sunak for that, I seem to remember that the Labour party wanted even more economic "support" during the pandemic....
Jim Ratcliffe blames Sunak for high inflation
The chemical's tycoon Sir Jim Ratcliffe has singled out Rishi Sunak's furlough system as a reason for the UK's persistent inflation, claiming the prime minister "gave away money like confetti".
Sir Jim is right, but is a little unfair to blame just Sunak for that, I seem to remember that the Labour party wanted even more economic "support" during the pandemic....
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So the new mortgage rules have come into being, three main changes.
People can change to interest only payments, or increase its term, for six months. The big change effects repossessions, where a bank might have started repossessions there is now a years pause before they will do so. Whoever wins the next election will end up inheriting one almighty mess.
All a mixed message IMO, the idea of the interest rate increases is to bring down inflation yet they now undermine them. It’s time the Government spread the pain by using other tools at their disposal, such as windfall taxes, and general taxation and vat.
People can change to interest only payments, or increase its term, for six months. The big change effects repossessions, where a bank might have started repossessions there is now a years pause before they will do so. Whoever wins the next election will end up inheriting one almighty mess.
All a mixed message IMO, the idea of the interest rate increases is to bring down inflation yet they now undermine them. It’s time the Government spread the pain by using other tools at their disposal, such as windfall taxes, and general taxation and vat.
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I don't think it's a mixed message. They're using interest rates to take money out of the economy, but don't want people losing their houses. The vast majority of people with mortgages will just tighten their belts to pay the extra.
I don't think a windfall tax will help, the government's aim is to get individuals to spend less. VAT makes a lot more sense, as it would target the "non-essential" market. However, the Tories have a reputation for increasing VAT (I think one of Labour's old attack lines is Conservative governments always increase VAT) so I think they'll avoid that for political reasons.
I don't think a windfall tax will help, the government's aim is to get individuals to spend less. VAT makes a lot more sense, as it would target the "non-essential" market. However, the Tories have a reputation for increasing VAT (I think one of Labour's old attack lines is Conservative governments always increase VAT) so I think they'll avoid that for political reasons.
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The most effective way to sort real inflation would be to drop house prices and rental prices
For the majority of people, paying for a roof over their heads is the majority of their spend - it has been a long time coming and was caused by massive over supply of capital to buy property fuelled by super low interest rates.
The rates are returning to more normal levels and people with big mortgages are catching a cold - unfortunately a lot of them are also buy to let owners mortgaged to the hilt (yes i know some here are BTL owners but you know the ones I mean who watched the tv shows and put every piece or earned income into just buying more) who therefore have to raise their rents to keep afloat which pushes more costs on their tenants who either need to get more pay out of their employers, go into debt or default.
If you went out onto the street and asked 10 average jo's about their outgoings and want was causing them issue I bet mortgage/rent would be top of the list followed by fuel/heating followed by food. Whilst a lot of people can cut their food bills by buying cheaper versions, cutting out the discretionary spend etc, few have much left to trim from energy bills (the standing charge is what it is) and nobody really has a choice over their housing costs all they see is the threat of ever higher mortgages, rents, council tax etc.
I think the govt is stuck in a position of it's own long term making where the very people who need to take the hit to re-balance the economy are their natural supporters.
I have said before, I would happily take a 50% hit on my house value, I could live with any amount really, but that is because i got on the ladder in 94, stepped up in late 99 and havent moved since paying off my mortgage years ago. My total investment in the housing market is deposits + total mortgage borrowed really so about £130k and my current place is valued at £600k which is stupid, if it dropped to £1 i would be no worse off than i am now but my children afford to rent a place or even buy somewhere. My son is paying over three times as much to rent his share of a shared 1930's maisonette than the mortgage on this 5 bed detached house was (just did sums on a 90k mortgage for 25yrs at 6%).
If i do the sums now as if i was doing my 1999 house move from a 2 bed terrace with mortgage paid off to this house based on current prices and 6% rate I would be looking at £2.6k pcm which is madness (and i wouldn't have been able to clear the first mortgage in 5.5yrs at current prices/rates) def I wouldn't have any "fat to trim" in my budget if I had that going out monthly before other fixed costs
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If you drop house prices and rental prices, people have a lot more money in their pocket. They go out and spend it on goods and services, which pushes up inflation. You'd also create a lot of negative equity. Those of us without mortgages are fine, but those in the early stages of buying property would be royally screwed. What's really needed to fix the housing market is an infallible method of taxing those of us that have done really well out of house price increases.
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I just can't see a way out of our economic malaise whilst people are paying so much of their earnings for something they can't avoid.
There are also some nasty feedback loops in the current system - such as the triple lock - pensioners who on average are more likely to have a home not a mortgage compared to the young are guaranteed an increase of the higher of CPI & Inflation unlike public sector workers who are fighting to get inflation and private sector workers whose productivity is showing no where near the level of growth needed to justify inflation pay rises (on average)
If the govt/BofE concentrate on high interest rates whilst also protecting mortgage borrowers they won't change their spending habits, inflation will stay high and pensioners who already have a lot of disposable income they don't use* will continue to get a de facto payrise whilst those who we need to buy things to give people selling anything a market to sell to will be sat at home in the dark fearing for the roof over their heads and leading us into a true recession.
A rise in IHT will also never be done by this govt as it again will hit their supporters the hardest
* i know a lot of pensioners have nowt but i think more than any other age group they are split into those without 2 farthings to rub together and a bunch living in owned houses with few outgoings, decent pension incomes and little propensity to spend it on things that the UK economy needs it spent on
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What would you suggest they use ?
PS they like inflation it reduces the value of govt debt in real terms as long as inflation > the interest they pay on the sovereign debt
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Interest rate rises only affect a small portion of people, many are on fixed rates, or without major debt. The Gov could consider windfall taxes on energy and banking sectors, both which are experiencing massive profits from none of their efforts, VAT increase, airport flight taxes, harder to get credit via loans and cards etc.
IF they truly wish to bring inflation down, they need to take money out of the economy faster and across more of the population.
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An d how would you suggest they remove money from the economy ?
Windfall taxes won't remove it as the excess profit isnt going into general populations pockets, VAT increase will hammer the worst off more (petrol for travel and energy for houses both have VAT on them as do a lot of everyday purchases like clothes and shoes), airport flight tax i agree with you but tiny amount really in the grand scheme of things. Harder to get credit, well people like stepchange are already saying the reduction in payday lenders has sent people to loansharks so you couldnt do it fast, you would have to restrict new debt slowly - and will harm businesses that rely on consumer spending
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They could apply increased taxes on those in the highest earning brackets, however, those people have deep pockets and tend to squirrel excess funds overseas to avoid being taxed too much.
House prices are still way too high, which means they're lending too much money again. You can control the housing market by restricting new mortgages, just a little, nothing excessive. At the moment, I have no idea how people can afford some of the properties. A 3 bed semi for £300,000? Made up price. The same property sold for £75k in the 90s. Even an interest only mortgage will be too much for some, with the size of the initial borrowing.
I can only think the plan is to massively increase private rentals and reduce home ownership to those with lots of capital. Rental prices are linked to property prices of course, because landlords have to get their money back from the initial investment. So it's never going to be cheaper to rent, if you're paying someone else's mortgage plus their profit.
House prices are still way too high, which means they're lending too much money again. You can control the housing market by restricting new mortgages, just a little, nothing excessive. At the moment, I have no idea how people can afford some of the properties. A 3 bed semi for £300,000? Made up price. The same property sold for £75k in the 90s. Even an interest only mortgage will be too much for some, with the size of the initial borrowing.
I can only think the plan is to massively increase private rentals and reduce home ownership to those with lots of capital. Rental prices are linked to property prices of course, because landlords have to get their money back from the initial investment. So it's never going to be cheaper to rent, if you're paying someone else's mortgage plus their profit.
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point 1: totally agree and the more you raise higher income tax the more the incentive to use other means to reduce your tax burden as the costs of doing so are less compared to the savings in tax
point 2: this is the obvious one but all parties are of the opinion that any one of them that makes people feel poorer as their houses drop in value will take a hit at the polls. It is blindingly clear that if you compare average house prices to earnings we are worse off not better - if you aren't selling up (or remortgaging) it matters not if your house is actually worth £1 or £1million. Restricting mortgages alienates other voters which again they don't want to do
point3: the rental market is broken - because many landlords are more susceptible to interest rate rises and with the new regs rental prices are going through the roof. My son was renting a 2 bed maisonette with an old uni mate in Leamington - they were paying £900, it has been sold and the place they are getting is unfurnished yet costing £1400 in Coventry, £700 a month is a lot for a 23yo to be paying for a shared house, remembering they all get 9% of anything over £27k back in student loan repayments on top of tax/ni/pension so their marginal tax rate is actually really high, 20%+12%+5% +9% so 46% of any pay over £27k goes straight back out to .gov, the extra £250 in rent needs nearly £500 more salary so there is your inflationary pressure immediately before they pay the extra for energy, transport and food price rises.
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Just as a quick update, a year on from Sturgeon bringing in rent controls in Scotland, the market has reacted as predicted. Thousands of properties lost as landlords quit, resulting in new rents going up way past inflation. These politicians have no clue, I thought everyone understood the law of supply and demand.
I spoke to a friend who is a landlord in Scotland, every new flat he puts on the market he gets an average of 40-50 requests to rent within 48hrs of them being advertise.
I spoke to a friend who is a landlord in Scotland, every new flat he puts on the market he gets an average of 40-50 requests to rent within 48hrs of them being advertise.
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How does that drop in rental properties compare with the rest of the UK.
If higher your point stands, if the same as rUK then rent controls irrelevant, if less then they have helped.
There are many many places in the Uk where places are currently being let sight unseen within hours - my son was refused a place that they have previously viewed (when they took the place they were just evicted from) because they hadnt got one of the 30 viewing slots available this time which were decided by names out of a hat - they had just rung up and said "it is us we looked at xyz property last year and see it is available for rent again, we will take it and can pay the deposit immediately, as past tenants through you you don't even need to reference us again"
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