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Rock on

Brian Taylor | 12:02 UK time, Monday, 21 January 2008

Didn’t make it to Tannadice on Saturday. (I was chairing a debate in Edinburgh on EU policy. There’s dedication, eh?)

But congrats to the lads on a great victory - and here’s hoping the two-goal hero Barry Robson stays at United, among his many friends and admirers.

On the sporting front, I toddled out to Braehead on Sunday to watch the Scottish Rocks basketball team take on the might of Newcastle Eagles. (Rocks won - but not by a big enough margin to progress in the Trophy.)

My eye was drawn to the Eagles sponsor, Northern Rock. Today, of course, we learned that the Rock is to get a significant sponsor of its own: HM Treasury.

Not exactly a shirt sponsor, perhaps, except in the sense that every one of us is putting our shirt on the rescue working.

On his blog, my colleague Robert Peston says the deal to guarantee bonds to be issued by Northern Rock adds up to public financial support to a private enterprise that is “breathtakingly large and without precedent.” Quite.

The Rock, of course, made its name as a mortgage lender. The current jitters in financial markets can largely be traced to problems which emerged in sub-prime mortgage lending.

Translation of sub-prime? It means lending to people who can’t really afford the loan.

So it must have taken a certain courage for Scotland’s Communities Minister Stewart Maxwell to choose today to announce his latest housing inititiative. (NB: Doesn’t mean it’s wrong. Just courageous.)

Mr Maxwell is promoting LIFT: that’s the low-cost initiative for first-time buyers. It’s a shared equity scheme whereby those who can’t afford the full cost of house purchase get support from a housing association.

Say there’s a house on the market in a property hot-spot for £100,000. A young couple, for example, might stump up £60k, with the rest invested by the association. When the house is sold on, the association would recoup its money.

Today’s move extends the scheme to Aberdeen, Aberdeenshire, Moray, Highland, Stirling and Perth and Kinross.

Arguments for and against. Isn’t this just attracting folk into the market who can’t afford it? No, say ministers, great care will be taken. This is not exploitation, sub-prime style.

It’s aimed at hot-spots. Won’t this just help keep prices in those areas artificially high? Isn’t there a case for letting them reduce, under market forces. No, say ministers. This will only help a few hundred at most. It shouldn’t distort the market.

What about the homeless? Shouldn’t they be the priority, instead of putative home-owners? Look, say ministers, at the many other elements of housing policy, including expanding the housing sector, boosting the role of local authorities and ending the right to buy on new social housing.

As ever, friends, over to you.


  • 1.
  • At 12:31 PM on 21 Jan 2008,
  • Dan Ritchie wrote:

On this sceme devil will be detail.
I think its a good idea but there are considerations.

I benifited through one of these schemes before. My first home was shared ownership. I bought 25% as it was all I could afford. Things got better and I thought it was time to move. Then I was told that the association had the right to first refusal if I wanted to sell my share. The deal was that the price will be the survey price. At the time houses were selling 25% over the survey price in the area. So I bought the house outright from the association at the survey price. A few months later I sold it privately and collected the full Market value. This is probably unfair but it wasnt my rules and it certainly helped me.

I think the agreement should be a pro rata share of the sale price then everyone benifits equally. It is a good idea and will probably be a good revenue stream for the Government in the future.

  • 2.
  • At 12:55 PM on 21 Jan 2008,
  • K wrote:

I bought a house through the Homestake Scheme in Edinburgh. I am a graduate Civil Engineer with a good job and yet I was not able to buy my first home in the normal way because prices in Edinburgh are particularly high. In places where the cost of living is beyond even those with good graduate jobs, these schemes are a lifeline which help keep skilled workers in areas which they otherwise would not be able to continue to live. I think the scheme should be exteneded otherwise the housing situation is only going to get worse as fewer and fewer first time buyers are able to afford a home and they after all are the people who prop up the whole market.
Instead of extendeding the right to buy on Council homes, tenents who feel they can afford to put some money into a new home should be encouraged to join shared equity schemes so that the Council housing stock does not deteriorate further. One of the main reasons for the lack of affordable homes is that the Local Authorities have sold a lot of them off for pennies only to have them reemerge on the market 2 years later to make the buyer a handsome profit. In Shared Equity, the Registered Social Landlord gets a percentage share back for the resale of the property which can be used to help many more people. It is a much more sustainable option.

  • 3.
  • At 12:56 PM on 21 Jan 2008,
  • David Jackson wrote:

Brian, I am afraid that most united fans are resigned to Barry going for a big pile of mulah. Dont think his skills are irreplaceable, though his leadership skills may be.

Home owners. This is such an enormous problem. I do know recently married couples struggling to get on the property ladder. Things really are pretty tough. Whilst the shared equity thing is worth having a go at, I do think that we have to be tougher on empty and second homes. It really is deplorable that people will buy a house, leave it empty, then sell it once its value has appreciated enough. punative tax on such things has to be considered.

  • 4.
  • At 12:57 PM on 21 Jan 2008,
  • Jim Torrance wrote:

I think Stewart Maxwell is doing the right thing here - its tough to get on to the housing market - not only does the purchase price become affordable, so does the monthy payments. If the property is sold at a profit the the public purse gains too.

So I guess its a pat on the back for Stewart Maxwell!

The government always seems to be up to something on our behalf - its good.

  • 5.
  • At 01:00 PM on 21 Jan 2008,
  • wannabuy wrote:

"Say there's a house on the market in a property hotspot for £100,000". In Aberdeen? There's nothing new under £200,000 at the moment, and everything else is *still* selling way over 'offers over' prices.

  • 6.
  • At 01:24 PM on 21 Jan 2008,
  • Ian wrote:

A couple of details I'd like to see to make sure I'm just helping someone and not just subsidising someones investment.

1) Say the house cost 120K (90K First time buyers, 30K housing assoc). When sold it sells for 160K, I assume the housing assoc will get 40K back.

2) What happens if the buyer doesn't move on in, say, 10 years. Do they have to take over the rest of the balance (to free up the money for other people).

And why will it only affect a few hundred? If this is a good thing, won't EVERY first time buyer want to take part. How will the housing association choose between people?

I'm also afraid I don't really believe that it won't distort the housing market. If it takes a few hundred houses off the market then that's a few hundred that people can't buy and the rest will go up in price.

I'd prefer to see a scheme that renovated old housing stock and sold them at reduced price to first timers (with caveats about leaving early, selling on etc.) Or measures to make BTL harder or penalise 2nd homes.

  • 7.
  • At 01:25 PM on 21 Jan 2008,
  • Graeme Stevens wrote:

I have a problem with helping first time buyers and (in the UK at least) I would be amongst them in that category. The problem I have is this. Helping people get houses they otherwise couldnt afford further inflates the housing market and there comes a point where the whole thing gets daft (if that point hasnt already come). Is it not better to have people waiting till prices come down and they can afford it rather than being boosted by the Government? If no one is buying, prices will come down. As the old adage goes, its only worth what you are prepared to pay for it.

On a more positive note, well done United!

  • 8.
  • At 01:27 PM on 21 Jan 2008,
  • Grant wrote:

LIFT - was the SNPs £2000 grant for first time buyers. The shared equity scheme is an extension of the Labour policy which has been successful at helping key workers onto the housing ladder.

I know that the SNP are the new kings of spin but to rebrand one policy of the previous government and claim to be fulfilling their promise the week before a consultation on the future of housing and face no scrutiny is pushing it even for them.

  • 9.
  • At 01:36 PM on 21 Jan 2008,
  • Mark wrote:

I already know of two friends who are taking advantage of the scheme. Early 20s, university educated, in stable employment but who until now have simply been unable to afford a home in a city centre. The difference the extra funding has made to them is incalculable; it is not merely the additional money, but the pride in being able to afford one's own home which, of course, has a wonderful effect on their self-esteem.

  • 10.
  • At 02:17 PM on 21 Jan 2008,
  • Karen wrote:

I am currently in the process of buying into a shared ownership scheme. I am 23 and single therefore could never afford to buy a property in full, on my own. It would cost me more to rent an equivalent property with nothing to show for it at the end. Shared ownership is not for everyone as home improvements are at the cost of the tenant but they only share a proportion of any value added. The government talk about increasing the amount of affordable housing however all the property being built and developed around me is going on the market for £150k+ which is outwith my realms of "affordable". I have considered this from many angles and for me, in my situation, it seems the perfect opportunity to get on the first rung of the property ladder.

  • 11.
  • At 03:39 PM on 21 Jan 2008,
  • bert wrote:

My idea would be to impose incremental increases of Council Tax for additional properties. If someone pays, say, £1,000 on their first property, they pay £2,000 Council Tax on a second property, £3,000 on the third and so on. This may free up some properties as multiple investment properties would be less attractive propositions

Merely enabling people to afford these newly built, over-priced chicken coops of flats just compounds the problem. Maybe if everyone decided they weren't going to buy anything for the next year that may bring a degree of realism to the price of property.

  • 12.
  • At 04:20 PM on 21 Jan 2008,
  • Scotsman wrote:

I'm surprised that folk are saying renting is more expensive than buying in hotspots. The only reason for first-time buyers to buy at the moment is some kind of security of tenure- the LIFT scheme obviously provides that.

Better to save your money for a deposit, as there won't be many (if any) capital gains over the next few years.

  • 13.
  • At 05:00 PM on 21 Jan 2008,
  • fiona carmichael wrote:

My first flat was shared ownership, It allowed me to purchase a 25 percent tranche in a one bedroomed new built flat . The HA held the other 75 percent. I paid a mortgage on my 25 percent and rent to the HA. I was liable for all repairs to the house. The repairs part was the downside, that being said it allowed me to live in a new built flat that was double glazed and centrally heated and built to HA standard. I was 21 when I moved into the flat and I was at UNI and we managed on my boyfriends salary. Not many students get to do that these days.

When I sold the flat , we gave first refusal to the HA and they didnt want to buy it back. So we sold it on the open market offering a full share.

It worked for me and am sure more people should get the benefit of these type of scheme.

Over all I think these are great stepping stone schemes.

  • 14.
  • At 06:34 PM on 21 Jan 2008,
  • Peter, Fife wrote:

Brian I note in paragraphs 1 and 2 you wax lyrical on Saturday’s events at Tannadice, yet in paragraph three you clearly state “...On the sporting front, I toddled out to Braehead on Sunday to watch the Scottish Rocks basketball team...” are we to deduce that you feel the activities pursued on the turf of Tannadice do not fall into the category of sport.

The proposals you hypothesise on would only fall into the ‘sub prime’ category if the percentage the overall cost which was covered by a loan to which the home owner would commit was beyond their means; any loan irrespective of the percentage of the property upon which this was based should granted based wholly upon a calculation of a current validated income of the individual who applies for such loan

  • 15.
  • At 07:24 PM on 21 Jan 2008,
  • L Telfer wrote:

Why don't councils set the price of housing? If the builders don't like it ,then don't give planning permission.If councils bought land by compulsory purchase for all housing, then the price of land could be set at a level slightly above agricultural value.Do not allow the sale of land to private developers without the councils' involvement. House sales should be monitored by the local council so that those working or residing in the area have first refusal of any availiable house. This would reduce house prices because the price of land and building materials which are controlled by demand would fall to a realistic level.

  • 16.
  • At 11:20 PM on 21 Jan 2008,
  • derek barker wrote:

driech news indeed Brian,when push comes too shuv,where is the help for those who need it most?"AYE" let us not forget that when it comes to council homes, they ask those with the least to pay the sum of £5 pounds per week for the fitted kitchen in a home they dont own,strange days indeed,THE ROCK,WAS THAT NO THE NICK NAME OF AN INFAMOUS PRISON ????????

  • 17.
  • At 11:56 PM on 21 Jan 2008,
  • mikey wrote:

As ever with these schemes the devil will be in the detail. I suspect however that the paperwork which will inevitably accompany the scheme will make it unworkable in property hotspots. Given that the scheme will require a full survey and that purchasers can only pay the valuation price it simply wil not work in areas where prices regularly exceed the valuation. Also the turaround times between a house coming on the market and going to a closing date will probably not allow enough time for a prospective purchasers request for assistance to be processed in time to offer. However it is good to se a positive housing story as everything recently has been doom and gloom.

I think it's an excellent idea and makes perfect sense. One it gives someone a house who couldn't ordinarily afford it and two, even with a 25% stake the buyer makes some money as the house gains in value (normally) which would then allow him to buy a larger stake in his next house.

The association has someone look after a house they partly own and they get the benefit of their share when they sell it. A win win situation all round.

The same philosophy could see benefits becoming a base, not an end product, from which people could launch themselves towards some semblance of normality by working full time or part time.

If they reach an agreed standard they would come off benefits. Meanwhile they will build up some capital and start paying indirect income tax via their purchases.

More importantly the entire family, especially the teenagers will feel more a part of the community which should cut down on youth crime.

A bit off message I know but it does have tenuous links with the subject.....I think.

  • 19.
  • At 09:07 AM on 22 Jan 2008,
  • G Purvis wrote:

Why is more of the taxpayers money being ploughed into schemes which only serve to feed the problem of home ownership.

The UK is standing out almost alone in Europe with its desire for home ownership. What is wrong with renting?
In Germany and France the rate of home ownership is much lower.

I was moving house about 10 years ago and felt Edinburgh was getting far too expensive and for the price of a 3 bedroom terrace in Edinburgh you could get a much larger 4 bedroom detached house in West Lothian. So we moved out of town. I'm sure lots of people did otherwise and not only does this decrease pressure on city centre house prices, it can also encourage more people to use public transport to get into the town. I rarely use my car to go into Edinburgh as the public transport is so good where I live. Personally I think that if hotspots are too expensive then we should look at improving public transport so that people can commute into the town from outlying districts. Assisting people via housing associations would simply seem to be adding fuel to the fire?

  • 21.
  • At 10:13 AM on 22 Jan 2008,
  • G Man wrote:

Why do first time buyers need help to get on the property ladder? OK so City Centre properties or other 'property hotspots' are outwith a first time buyers reach? Solution? Move somewhere more affordable and work your way up in the market! That's what I had to do, it gave me something to focus on, a reason to study and work hard. It motivated me to sit and pass my driving test so that I could travel to work and has ultimately made me a better person. Now that I mention driving...I'm going to buy a new car at the weekend and all I can afford is a Ford Fiesta. Can I please invite Mr Maxwell to come and buy an 95% share in a Porsche Boxster?

  • 22.
  • At 10:18 AM on 22 Jan 2008,
  • Graeme wrote:

Basic economics suggests that this will increase house price inflation.

  • 23.
  • At 11:15 AM on 22 Jan 2008,
  • EricH wrote:

Twenty years ago I bought my first house in Peterborough, from the builder, with an 18% equity from a local housing association which I bought out after three years. The other option was to wait till I sold the house and they would then retain 18% of the sale price. I could not have afforded the house at that time at the full price. This type of policy has been around for many years and is not political party specific as some blinkered posters would have us believe.

  • 24.
  • At 11:19 AM on 22 Jan 2008,
  • Robbie wrote:

G Man,

That's all very well. Unless, of course, you're trying to maintain and build communities. This is especially the case in affluent but rural areas.

There is currently no chance that someone on an average income could afford to but in St Andrews for instance. Young people but choose to rent or move away.

  • 25.
  • At 11:44 AM on 22 Jan 2008,
  • EricH wrote:

Twenty years ago I bought my first house in Peterborough, from the builder, with a 25% equity from a local housing association which I bought out after the three year minimum option. Another option was to wait till I sold the house and they would then retain 25% of the sale price. I could not have afforded the house at that time at the full price. This type of policy has been around for many years and is not political party specific as some blinkered posters would have us believe.

  • 26.
  • At 12:32 PM on 22 Jan 2008,
  • EricH wrote:

Twenty years ago I bought my first house in Peterborough, from the builder, with a 25% equity from a local housing association which I bought out after the three year minimum option. Another option was to wait till I sold the house and they would then retain 25% of the sale price. I could not have afforded the house at that time at the full price. This type of policy has been around for many years and is not political party specific as some blinkered posters would have us believe.

If you subsidise home ownership, you ratchet up the speculative bubble of house prices. UK housing is now inflated hugely above any rational value; it's a bubble, and sooner or later it will burst.

People on low incomes who have bought houses at the top of the market will be drastically hurt - left with debts they have no hope of paying off.

And that is essentially what the government is doing. Subsidising the bottom of the housing market will raise entry-level prices, while at the same time increasing the instability of the tottering bubble.

No-one will benefit.

  • 28.
  • At 02:10 PM on 22 Jan 2008,
  • CassiusClaymore wrote:

Not entirely sure why the government is speculating in property on my dime - not what they were elected for. As other posters have noted, this will simply make the hot spots hotter.

  • 29.
  • At 03:40 PM on 22 Jan 2008,
  • Dave "Boy" wrote:

This is a well intentioned move, but is likely to have the same impact as MIRAS and the London Weighting Allowance have previously had on house prices - upwards.

If you distort the market by artificially making things more affordable, the market will grab some of that affordability for itself and in the long run people will be no better off.

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