27 Oct 2013, 6:18pm
living intentionally personal finance reflections:


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  • create more, consume less – it’s cheaper and more fun

    The Ermine household decamped to North Norfolk over the last week, to reflect upon the world, eat seafood and wonder on the meaning of life. The North Norfolk coast is an unspoiled part of the country noted for its birdlife and fine beer.

    North Norfolk

    North Norfolk

    It’s been a couple of years since I’ve been up here, we rented a cottage for the week in Brancaster. Mrs Ermine delivered herself of the opinion that the coast was becoming “chi-chi” which I think means gentrified somewhat. . Burnham Market seems to have become a kind of culinary haven. There was lots of reasonably tasteful housebuilding going on on the south side of the coast road, though the usual 3,4,5 bedroom sizes, ‘cos house building is more profitable at the ‘executive homes’ end of the market, so all the people who are making things happen for the holidaymakers seem to have moved to the towns such as Hunstanton. On the personal finance angle this sort of thing gave me the willies –

    Help to Buy

    Help to Buy – don’t do it

    Seriously, good people of Hunstanton, don’t do it to yourselves. I bought my first house with effectively an 80% mortgage in one of these pump-up-the-market fiascos in ’89 – I had 20% down and I bitterly regretted it. House prices don’t always go up. If you have only got 1/20th of the cash to buy a house and need a mortgage for the rest then you can’t afford to take out a mortgage when interest rates are at historic lows because you will be killed when they rise. I paid 14% at one time. But you won’t listen, so the best of British luck to you, you’re gonna need it…

    Aye, it could get you moving. Could get you repossessed later on, too...

    Aye, it could get you moving. Could get you repossessed later on, too…

    However, my third holiday of the year seemed to be a good time to ponder on that numinous quantity known as ‘living life to the full’. I normally hear the latter in terms of ‘I want to spend loadsamoney on manufactured experiences and extreme sports on the few days that The Man lets me off the leash, which is why I need to spend more than I earn, and YOLO 1

    My journey out of the rat-race wasn’t as measured as, say RIT, who carefully plans it and track progress. However, I did discover some odd things about my life as a consumer, and then as a consumer of less. I discovered some of these by sounding the extremes – by first consuming at a average middle class level (couple of foreign holidays, Sky TV 2, loads of driving etc) and then by slamming the brakes on – no foreign holidays for a few years. Like many things in life, the optimum is to be found not at the extremes, but somewhere in between. However, it is surprising how far towards the low-consumption end the optimum is, for me.

    You see, the trouble is that we humans are creatures of difference – we observe things as dynamic contrast, rather than absolute levels. This is good, in a way, because it helps us adapt to the stupendous variation in the natural world. We can see a candlelit face, and recognise the same in full sun – we pick out the differences in shade, not the absolute levels. We do that at the macro level too – too many studies show that happiness is in our relative position to others in many things. We all want to be king of the hill, and consumerism increasingly plays towards this ‘lifestyle’ element.

    I was able to break the hold because the experience of working was worse than the upside of consuming, but the aim of marketing is to keep us in the zone – where there are improvements to be had, but that each hit gives us the feel of a slightly improved lifestyle. It struck me when I inquired of Quicken 3  how things had turned out since I left work.


    An Ermine's net worth

    An Ermine’s free cash net worth


    Although Mr Micawber wouldn’t approve 4, it isn’t a precipitous crash, and, indeed, since the original plan was predicated on a two or three year stretch before I draw my pension, and I am nearly a year and a half on, I actually have more options than at the start. Quicken seems to indicate I’d have about four more years of burn from now before I’d have to start liquidating non-ISA holdings.

    This is a subset of what most PF folk count as net worth. It doesn’t include my house, because despite what some people say, it isn’t part of my financial net worth 😉 I list my non-ISA investment portfolio at the price it cost me to buy,  underestimating it because a lot of this was stock options, and The Firm has been going strong since 2009. Some of the drift upwards early in 2013 wasn’t moonlighting, it was taking vesting stock options onto my books at option price. It shows nothing of my pension, either the AVCs that I poured money into for three years nor the capital equivalent value of the main pension. I don’t count what I can’t touch.  It doesn’t show the value of my ISA, because I can’t make Quicken show it at purchase price – it always uprates the value from the last transaction. If I allowed Quicken to include the ISA it seem to indicate a gradual rise in free cash net worth, which is barmy – my total income is a long way below the personal tax threshold, and stock gains aren’t real till you either take the divi or sell up. It appears the Man from the Clapham Omnibus is back in town, which roughly translated means the figure for market value at the bottom of my ISA statement is overvalued compared with what it should be. I struggled to find value earlier in the year so I did a Bed and ISA capital gains defuse rather than buy.

    Quicken is all about cold hard cash going in and out. It tracks the bills going out and non-ISA dividends and stuff coming in, because I take all my dividends as cash. It’s a shame that there’s no decent alternative to Quicken, which is ten years old and no longer downloads stock prices. I did look at alternatives to this over 10-year old program, but unlike MMM I just don’t do cloud.

    What every wannabe early retiree is scared of, while working, is that they quit and find their expenses are a lot higher than they anticipated. I was scared of this too over three years ago. I was really scared of it when I retired as such, because once your rattle over the tracks past the point of no return there is no way back. It caused me to over-estimate spending, big-time.

    It also caused me to underestimate income. Share dividends come in ratty little onesy-twosey bits, but they add up over time. I’ve only ever had one main source of income, and I find it hard to see small bits that rattle in from disparate holdings as income, it just doesn’t feel real. Although Quicken counts them in, I don’t know how to budget for that.

    Why did I over-estimate spending so badly?

    There are some things that are easier to see in the rear-view mirror. Working really screws up your life in some ways. It means you have to buy control over some things, and pack the rest of your life into evenings, weekends and four to six week’s annual holiday. It pays you handsomely, hopefully, so you can pay for that control, you can buy experiences that are as much unlike work as possible and try and recover in that time, it makes you pay for other people to do what you may be able to do yourself. And it’s really, really, amazing how much that adds up. It’s not just amazing, it’s actually quite scary. If I’d know that earlier I would have done quite a lot of things differently.

    And yet, that doesn’t totally explain the dramatic over-estimation. I pinched the title from this great article which pointed to another reason – because the blog is the Art of Manliness it talks to the masculine but I don’t think it’s just a guy thing –

    Men have an inherent desire to be creators, to change the landscape, to turn wood into furniture, to transform a blank canvas into a work of art-to alter the world and leave a legacy. It’s the denial of this aspect of manliness that is perhaps most plaguing modern men. Young men are taught to think of life past 30 as a certain death, a time when they have to stop being selfish and live for others. The paradox that’s never talked about is that consuming is the real dead end when it comes to happiness. Your mind gets caught in an fruitless cycle-new experiences initially give you intense pleasure, but the more you consume of it, the more saturated your pleasure sensors become until you have to ratchet up the intensity and quantity of the experience to get the same “high” you used to. And the cycle endlessly continues.

    I did some of this – all the way from teenage years to my 40s I was creative, outside work I would develop things and design stuff, poke around on how things worked. But slowly the wellspring of creativity dried and I became that consumer. I had plenty of hints of consumerism earlier in life with too much spent on hi-fi and photography, but as a form of anomie started to settle in as I found the workplace more alienating my creativity fell away and passive consumption rose.

    It was a vicious circle, because it started to rob meaning – the process of originating, creating, directing and learning and becoming more aware is part of what I find gives meaning to life. I’m uncomfortable with some of the Calvinist terminology in the AoM post, but I admire its resonance with some degree of inner truth. I may not share their terminology or world-view, but I recognise the map and the territory described. As working life faded to grey after two or three decades, I became reactive. In build resiliency by taking control they have a summary of the characteristics of having an internal or external locus of control

    Those with an internal locus of control:

    1. Are confident that they can be successful.
    2. Tend to be leaders (leading those with an external locus of control).
    3. Exhibit greater control over their behaviour.
    4. Seek to learn as much as they can.
    5. Take personal responsibility for their actions.
    6. Deal with challenge and stress better.
    7. Use challenges to come out stronger than before.
    8. Thrive in the midst of change.
    9. Are less likely to submit to authority.

    Those with an external locus of control:

    1. Feel like they’re a victim.
    2. Are quick to blame everyone but themselves.
    3. Want to be led by others.
    4. Avoid responsibility.
    5. Are more prone to stress, anxiety, and depression

    Here’s a test you can take to observe your own Locus of Control. To me its 1966 provenance shows in the unusual question bias, but I guess the principles still hold.

    If I lose internal reference I drift towards the second list. As a younger Ermine (20-40) I had more characteristics from the first list, particularly 1,4 and 9, although I was weak on 5, tending to blame circumstances though fighting them nevertheless. And as far as the right royal shafting I took from the housing market I had 1 and 2 off the second list in spades – I could whinge like the best housepricecrash.co.uk-er, just 20 years early 😉 But at least I did do something about it.

    From 40 onwards though I made some progress outside of work intellectual creativity began to fade, part of this was rising up the greasy pole, and part of it was shifts in work from electronics design to software design, then networking, all coinciding with increasing managerial role while The Firm was getting less hierarchical but more command and control 5. Once upon a time I probably had the potential to be outstanding with electronics design, just as The Firm moved away from that. It obviously wasn’t such a burning ambition as else I would have switched job, maybe moved to Cambridge which has numerous little companies in need of designers. I learned to be mostly competent at software but code is probably something where you should have started in your teens if you want to be brilliant at it. I was too broadly based whereas what IT wants nowadays  is depth – I’d programmed in Pascal, Modula-2, C, c#, c++, Visual Basic, Z80, assembler, Perl, PHP, Python, Javascript, Java, ASP – a motley mishmash of technologies depending on what I was doing at the time.

    IT networking bores me senseless, I could do it serviceably but all the daftness of Cisco accreditation 6 struck me as tedious. and by the time that became the Next Big Thing at The Firm I was burned out, and displayed too many characteristics of the second list. I never looked to work to give meaning to life the way many do, but I wanted to at least pass the time doing something vaguely interesting that offered challenge. Anomie is a warning sign that says ‘Self, thou art not true to thyself’ but like many such warning signs they only become apparent once you have passed the point of no return. By the time I got that way I was well into List 2 territory, and an external signal was necessary.

    The Pleasure of Walking Tall (cringe)

    A Man with Savings…doesn’t have to kiss The Man’s ass…

    It came in a performance review in 2009 that I interpreted as a charge of incompetence. One project had collapsed, I hadn’t found another, and this manager was fitting a distribution that was squeezed down because of some ghastly Group financial results. 7

    The narrative I told myself in the next three years until I retired was that this was a dreadful experience in which I lost – the wheels came off a a serviceable career as it exploded on me in the home straight. However, on reflection, it discounts an important part of the story, once again, one of those things that is clearer in the rear-view mirror than as you drive over it. In one way this tosspot did me a favour, because he made me angry. The signal reached the jammed creative centre, and a spark was struck across the fallen poles, and I remembered the values of the first list. I decided that I really was an awkward bastard and didn’t want anybody being able to push me around like that. It helped that I soon found out this manager had had a new baby (he was in his early 40s and on a second marriage) and was therefore particularly financially fearful himself in those troubled times of 2009 and needed the security. He was the antithesis of where I wanted to be – The Man owned his ass. As The Pleasure of Walking Tall narrates, the point of having savings is not to end up in that sort of hole. So I needed to get me some, and sharp.

    Two days later I committed savings to filling a Cash ISA, and two weeks later I read this and opened an III S&S ISA all before the financial year end, to clear the way to repeat the exercise the next month, derisking the impact of getting ejected from the company. An internal application launched earlier paid off and The Firm discovered I had a unique skill they needed for the Olympics work.

    Although I perpetrated a bit of old trading  folly in the ISA at first before I straightened myself out and learned some of the art of sitting on my hands, the next year I read this and got myself onto the right track. One of the entries in my ISA, Merchant’s Trust is still one of my favourite portfolio lines because buying that marked my transition from a trader to an investor. I still look at it fondly, because MRCH has now repaid me 1/5th of my capital stake in dividends over the years and appreciated in value by about 50%, it’s the oldest holding I have. Other shares have appreciated by more, and I was far too slow to build on that by buying other investment trusts on a discount but it marked the turning point, and a shift from thinking like #1 on List 2 to #1 on List 1. I was repossessing my locus of control, and MRCH gave me hope when I needed it that this investing malarkey could work to help me gain control of my financial destiny. I built on that, although it is my non-ISA investments and other motley bits that have headed off the expected decline in cash networth sine 2012, the ISA is growing well.

    It’s a gradual shift in perspective, to come to see this manager not just as someone who stiffed me to save themselves, but also as a wraith that woke the slumbering pilot at the controls drifting aimlessly in the foggy murk. The external signal highlighted what I needed to do and the choices before me. The low-risk option was to try and find a job elsewhere, and the long shot was to chance it and buy my way out of the rat-race. I favoured the latter, because it attacked the cause, another job would have been attacking the symptoms. I didn’t want to appease The Man, I wanted to eliminate the sonofabitch from my life. That needed three years – however I sliced the spreadsheets it was going to take that long 8.

    Casual consumption showed up as something that was standing in my way, and by force of will I grounded as much of it as possible. An awful lot of people call casual consumption ‘living life to the full’ which is great if it works for them, but it doesn’t wash for me. Meaning doesn’t come for me with what I buy, it comes from what I do and what I am. It’s funny how easily The Man gets people to identify with an advertising slogan so they keep working for him. Inadvertently I discovered what the AoM said was true

    Your mind gets caught in an fruitless cycle-new experiences initially give you intense pleasure, but the more you consume of it, the more saturated your pleasure sensors become until you have to ratchet up the intensity and quantity of the experience to get the same “high” you used to. And the cycle endlessly continues.

    You only get to see that in the rear-view mirror after you’ve won the battle, the sulphurous stench of the slayed dragon stinks up the place and you wonder how you missed it for so long. Maybe it’s swept away in the tailwind of all that consumption.  Now I wasn’t exceptionally susceptible to consumerism – I didn’t do consumer debt f’rinstance, but it still called me off course. Consumerism is designed to do that, it’s how profits are made, by getting people to think they want things that they don’t need, and getting them to depend on stuff for their happiness. This is, indeed, being honed to a higher plane as I write – businesses are increasingly selling experiences rather than Stuff, and even experiences that ‘lead to personal transformation’. If you think about it, paying someone to transform you is a little bit bizarre, perhaps with the exception of medical intervention. Take Weight-Watchers for example. Customers are basically paying the company in the hope of avoiding using self-control. After all it’s fairly well-known how you get fat – you eat too much 9. Apparently doctors

    should also explain to patients “how much motivation and commitment” is needed to complete weight management schemes and that enrolling on one will not be a “magic bullet”.

    No shit Sherlock. If this comes as news to you then I’d say your weight is not necessarily your most pressing problem…

    Consume Less – YOLO and life is too short to sell it for trinkets and baubles when you can create more

    I shot the beast of Consumerism in the three years of saving, and that is long enough to break the chain, I don’t identify with what I buy any more. If I have a requirement, I will go on the Net and see if I can find something that will help me with that at a price I am prepared to pay.  And it’s increasingly tools that I want to pay for, that help me transform my world, and create stuff.

    Consumerism tries to make everything easy for a price, but it carries the corollary, that in making everything easy, the blade of directing your path through life loses its edge. It  holds people in thrall to working for The Man and weakens their ability to take action to shift their destiny. And it did that to me. I’m not inviting this sucker back into my life any time real soon, though I shall make peace with it.

    As a welcome side-effect of that my costs go down. I hear from other retirees that they were often pleasantly surprised by the lower spending rate. So much of consumer spending is compensating for flushing away one’s life 8 hours a day, five days a week. It doesn’t hold for everybody, there are many people who do enjoy what they do at work and the way in which they do it, though the latter seems to be dropping away with the way finance seems to drive human values out of managing people at work.

    What do I spend less on –

    • cars. I sold my car soon after retiring and the ermine household is a one-car household. If I wanted to enterprise rent-a-car is just up the road but I haven’t felt any need
    • transport generally. I walk a lot more, and I’m ready to fit in with other people for rides – to lend a hand in return for seeing new places, I have a perfectly serviceable bicycle
    • holidays (compared to my wage-slave self, not ultra-frugal Saving Madly self) – I go on holiday more often, but fit in with other opportunities. Like going to a campsite in the Cotswolds while Mrs Ermine was at a spa – I do the driving, get a free ride, and spas are not my thing at all so it would have been a sheer waste of money to join her 😉
    • casual eating out
    • anything to do with work, natch – clothes, meals, commuting etc

    What do I spend more on

    • Wine. Given up using supermarkets and I use a local firm Wines of Interest because I’m prepared to pay for people to screen out ropey wine for me. We drink less than through some of the ghastly period but better, so overall cost has gone up
    • Things to make things with – tools, components, materials. I don’t spend money on training or learning because I have time and Google is my friend 😉
    • decent eating out. The overall total is probably lower but when I do I want it good. Seems to be a theme on retirement spending – it has to be good or not at all. Better and fewer times beats often and crap

    I am easy with slowly losing the fight to inflation as well as the slings and arrows of spending and monthly bills, because at the moment I have no pension income, which will more than fix that. I reinvest ISA divis back into the ISA, natch, so these don’t show. Too many people labouring away at the coalface believe that once you’d retired you end up eating roadkill by the flickering light of a paraffin lamp under the railway arches unless you have stupendous amounts of capital. Even without a pension and no access to a significant part of my savings there isn’t the precipitous fall that scenario would imply.

    I can also now  strike a better balance with consumption. One of the things I discovered by cutting as much as possible out is that you do miss some gratuitous consumption. Some consumption adds colour to life, but like herbs in cooking, a little goes a long way. My biggest loss was no holidays for three years. I haven’t continued with that policy, because holidays are a lot cheaper when you have control of your time. I discovered several shorter ones more local are the right balance for me at this time – so that’s what I’ve done – three out of my four holidays this year are in the UK.

    Another thing I discovered was that you get a lot more bang for the buck if your consumption is infrequent. You just notice it more and get more from it – it’s that human sensitivity to differences again. For instance, in Norfolk a couple of times we walked about fifty yards to the pub round the corner, the White Horse, to have a meal and a couple of drinks, despite having a generous stock of fine beers with us. We had discovered Tesco had an offer on Adnams bottles beforehand, so we had taken some with us.


    However, there’s that dynamic contrast thing again. We could have eaten out in the White Horse every night, and indeed the first night we dined well there. It’s apparently a Telegraph favourite though Guardinistas favour it in the summer. Presumably they divide up the year that way there aren’t any fights in the bar given the differing world-views 😉

    But eating out and drinking every night would have been too much, and would have doubled the cost of the holiday. A couple of times, however, was just right, and if you are going to do consumerism then savour it – infrequently but well scores over frequently and routine to me. Plus, let’s face it, you can’t do this too often

    they had a wonderful plum and ice cream dessert

    they had a wonderful plum and ice cream dessert

    because otherwise you become a fat bastard 😉 I can vouch for the fish and chips which are a step apart from the usual pub fare, and Mrs Ermine can vouch for the mussels which are from about 100 yards away. It is a transformation when you reasise the truth of what Mr Money Mustache opined. Restaurants aren’t a place to get food. They are a place to get experience, preferably enjoying good company. At a single stroke that destroys the raison d’etre of all fast food and coffee experiences, and almost forces you to raise your game.

    Consumerism isn’t inherently the devil in disguise, it is the degree to which you do it. Without thinking what is of value to you, it’s easy to end up doing way too much. RIT has a nice  post on how to qualify what matters to you and spend accordingly. I have to admit that I don’t follow his step 1. I have never run a budget – I have always used Quicken to observe and analyse spending in the rear view mirror, and adjust accordingly. But this was probably born from not spending more than I earned (using the feedback from Quicken, or the balance in my bank account before I had Quicken). Whenever I’ve tried to do a monthly budget it made me annoyed because it forced things into monthly cycles, so you’d have to divide annual spends like insurance, TV licence and road tax by 12 and they’d still catch you out. Must be just me that has the problem though. I’m absolutely behind RIT from Stage 2 onwards.

    I had no idea that I could ground spending enough while still consuming at a level that gives me 80% of the enhancement of quality of life consuming can do for be with less than 20% of the cost. I underestimated the yield from non-ISA investments, which appears as cash in Quicken, paying things like bills and general running costs. More importantly, however, I consumed less than I thought I would, and created more…

    Hat tip to the Art of Manliness 10 for summarising how to control your costs and have some fun so well. It works particularly well in retirement because you control your time, but the principle is general.

    Create more, consume less


    1. I like the Urban Dictionary’s definition of ‘The dumbass’s excuse for something stupid that they did’
    2. DxGF was the main consumer, I didn’t miss it after we parted
    3. Intuit’s Quicken, and Microsoft Money, were programs on a PC that used to be the ways people tracked spending before we all decided to surrender control, lose resilience and invite all sorts of bad guys to observe our finances using web-based ‘services’ in The Cloud. I don’t do Cloud, unless broadcasting is the nature of the product, I think it’s mad, insecure and leaves you hostages to fortune as companies turn things off or hike fees.
    4. This is the reason why early retirees are usually advised to retain their mortgage and not pay it down before they draw their pension. They can smooth out the suckout in income during the intercession between stopping work and getting hold of their pension commencement lump sum, which they then use to discharge the mortgage. I will have to invest mine.
    5. When I started as a grunt in 1988 I could sign a purchase order for up to £500. When I was working on the Olympics in 2012 I had to get rail tickets authorised in advance from two levels up
    6. the world of IT networking involves Cisco (or vendor of choice) accreditation exams, which, I’m sorry, but in my view are a combination of vendor lock-in, memory tests and low-level technician qualifications about how to use the specific unix-like command set and feature set of the specific boxes. And it’ll be outsourced to India by the time I manage to cram all that stuff, after all, connecting disparate locations together is what computer networking does to earn its rent, and it’s easy enough to remote the management network.
    7. There was a financial silver lining in that a sharesave came out right at the low-water mark -I dropped every single previous scheme I had running to reallocate to that one, split across the three and five year terms, because I didn’t know how long I could stick it for. These, plus a lot of Share Incentive Programme shares  are a large lump of my non-ISA shareholdings and The Firm is now working for me rather than the other way round.
    8. on the original spending assumptions – in hindsight I could have probably done it earlier
    9. For the likely customers of Weight Watchers it’s not about exercise. Although there are good health reasons to do exercise, for non-athletes the effort of the amount of exercise you need to do to burn off calories is unrealistic compared to the effort of not eating them in the first place – most of the win is in consuming less IMO
    10. I see absolutely no reason why this should be particularly applied to men specifically
    24 Jul 2013, 7:04pm
    housing personal finance:


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  • Help To Buy. It’s time to get on board

    There’s an evil asset class in Britain that hurts the inhabitants even though they are in love with it. Warren Buffett charged gold with not delivering an income and a lack of productivity, but at least gold has the honesty to just sit there, glinting. This asset class causes Britons to lock up stupendous amounts of their lifetime earnings in a lumpen asset. It’s called residential property, and in a curious Stockholm syndrome people want it to always rise is price, even as that hurts the people they supposely love the most – their offspring.

    a toxic British asset class

    a toxic British asset class

    Britons imbue property with a magical aura, it is the one asset class that will always deliver. As such the price of houses in Britain has risen to high levels relative to wages. I derived the associated graph from the Government data on this. I have no idea of whether using the median is reasonable – it is apparently the point at which half the datapoints lie above it and half below. If we take Ipswich as typical of places outside London this is running at five times median earnings, I’ve listed London and England separately but I’d imagine London and the south east skew England up.median houseprices to median wages by region

    What does that actually mean for you, the putative homeowner at the start of your house-owning career?

    Let’s take a moment to think what this means. Apparently most people go to university now, and you leave university at 21 or 22, and you will retire at 67, so your anticipated working life is 45 years nowadays 1. About ten years in, typically 2, you will purchase an asset that costs you five years gross salary. Unless you were born with a silver spoon in your mouth you will buy this on a 25 year mortgage, and if you consider trying to buy this outright in that time 3 you will pay about three times that price, though inflation sees to it that in real terms you will only pay double the price in real terms 4.

    That means that by the time you retire you will have tied up ten years of your income in that house. In the UK you can’t offset the interest you pay against income tax, so you have to pay that from taxable income, so you’ve probably tied up about 12 years of income in keeping a roof over your head.

    Yikes. I was mad enough to buy a house on an income multiple of about four times but at least I had a 20% deposit, and bitterly regretted the stupidity of that move. After about twenty years, a house move and some of the other slings and arrows of life it sort of came okay in the end, but it was a nasty ride. My income rose over the period I was working, and I discharged my mortgage in 20 years rather than 25, so I probably lost about five or six years of average income to that. That’s about a fifth of my working life, so the actual proportion lost to housing is not that different, despite the structurally higher income multiple nowadays.

    The Government, eager to buy votes, has observed that Brits like nothing better than rising house prices. They’ve been busily devaluing the currency and printing money to help with that, though unfortunately average wages don’s seem to be keeping up. But house prices have generally at least not gone down, because people hate that. Monevator observed that real house prices have increased about 3% p.a in real terms since the 1970s. Now to some extent that is understandable. Britain has become far richer in those 40 years, we spend a far lower proportion of our incomes on some essentials of life, like food and energy, and in many ways British houses are a lot better than they were in the 1970s – they have things like central heating and inside toilets that weren’t universal in the ’70s.  So some of that increase in real price stands to reason, you’re getting more house for your money.

    Not all of it makes sense, and the slow creep of prices to wages will eventually mean it won’t be possible to buy a house outright within a single working life, though this is offset by the increase in the length of working life due to increasing life expectancy. I have already experienced the trend – I was older than my Dad was by the time I discharged my mortgage, though I had a better job than he did and he had the cost of raising a family. At the point a working life isn’t enough to buy a house we will either have intergenerational mortgages like the Japanese, or a revolution, or massive inflation. Nobody looks at the big picture when buying a house, what they look at is the price of the loan, and can they afford it at the time they take it out.

    Which is where the Government comes in. Our Dave has already been fiddling about in this area, with Help to Buy. Now the most damn fool thing that a first-time buyer can do, in my view, is to by a new house because they get to eat the new to secondhand price hit when they come to sell it – but Help to Buy was designed to do exactly that; help first time buyers to buy new houses.

    I’m sick and tired of Britain’s high house price policy. And I even own a house, outright. But I don’t want to sell it, I don’t want to move anywhere, I want it to sit there and do the job I bought it for – to keep the rain off my head and give me somewhere to stick my Stuff.

    However, due to Government policy of giving money to people to buy houses, I need to buy a house. Strike that, I need to buy another house. The trouble is I hate everything to do with houses in Britain. I don’t want to buy another house. I probably could raise the cash, but I don’t want to putz about being an amateur landlord and take the risk of rotten tenants or voids and all that malarkey. Everybody in Britain says go for Buy To Let, old man. I know people half my age that ‘own’ two houses 5. I don’t want to piss about with BTL.

    I don’t actually consider my house part of my financial assets. But though I have commercial property as an asset class in my ISA, I have no residential property. Eeeeurgh, the very thought brings me out in hives, I loathe residential property as an asset class, particularly the thought of owning such a lumpy, illiquid asset with the whole world of hurt and transaction costs that go with buying and selling it. If you’ve never done it and look wistfully at the thought of buying a house, you take the shaft from the solicitors fees, from the estate agent’s cut of the selling price (which buyer and seller effectively pay between them, though it’s charged to the vendor), the survey fees, from the government stealing a slice via Stamp duty, then if you buy with a mortgage then the mortgage company will charge you an arrangement fee, a mortgage insurance guarantee, a high loan to value fee and anything else they can lob into the pot. Then there’s any rewiring costs, painting and all the futz and hassle. And people say the stock market is risky…

    So I don’t want to buy a house. What the hell would I do with it, I’m trying to get Stuff out of my life, not get more. But the Chancellor has just declared that he is going to drop money on you with a helicopter, if you use it to buy a house. How do I get a slice of the action? Well, what’s the aim of this policy? To stop house prices falling make house prices go up in nominal terms. Never mind the poor chumps who don’t have one yet, your boat’s just gone out. Never mind the people that have just had another child and want to move to a bigger house, tough luck on you too. Where’s the Chancellor going to get the money from? Hell, he’ll get Mark Carney to print it. The latter has also declared his aim is to target nominal GDP growth. That means inflation. Your house price will go up but so will the price of gas and food and just about everything else in life. So you will sit there thinking “Great – thanks to that nice Mr Osborne I have more money to buy a house with.” If you have one then you will sit there and think “Great, thanks to that nice Mr Osborne fools will pay me more for my house” without realising you are the greater fool overpaying for your next one. And you’ll mutter to yourself how everything seems to be so expensive these days.

    How to get into residential property without buying a house

    So I don’t want to buy a house, but I want some exposure to the asset class, and unless I want to become an amateur landlord and do BTL and all that crap that’s not easy to do. Plus I only want some extra exposure to the asset class, not a whole damn house’s worth. There are two ways of doing that

    One is spreadbetting, but unfortunately you don’t seem to be able to go to a spreadbetting firm, say here is £1000, stick it on the Halifax house price index and I’ll come back for it in three years time. Well you can, but they will charge you a daily finance charge even if you try and pre-lodge the cash with them, because that’s how they like to make money. Although the day rate looks low, it adds up over time. They don’t pay you any interest on the money you have lodged with them. You use spreadbetting over weeks and months, not years. Why three years? Because that is when there is going to be a sunset clause on help to buy. Now the Ermine has had previous experience of what happens when there is a sunset clause on Government fiddling in the housing market. way back in ’89. When Lawson stopped the ability for couples to pool MIRAS entitlements up to £60,000.

    What happens is there is a feeding frenzy that ramps up prices and everybody goes mad with Torschlusspanik to get in there and get a slice of the Government pork. Yes, that was me too – and I was only a single person buying a  house, but I was unlucky and stupid enough to want to buy it in this feeding frenzy and only saw escalating prices. Hell, some colleagues even pointed out there were distorting circumstances. But I Wanted. It. Now. Yes, I did get MIRAS, on 30k of the price, and it was worth about £1000 p.a. and the then-prevailing interest and taxation rates. It probably compensated me for, oh,  about 10% of the amount I overpaid for that house, and I didn’t even have a partner to get the extra MIRAS over 30k 😉

    Volatility is lower with houses than with stocks

    I actually bought after the cutoff date, which taught me something else about house prices. They respond slowly. A stock price can go from hero to zero in seconds, whereas look at the languorous pace of the house price index – house prices move slowly. This isn’t such a surprise – after all transactions of high-frequency trading in stock prices are measured in terms of microseconds, whereas the whole mortgage arrange/survey/offer/exchange contracts is about six to eight weeks in England. Even as a cash buyer you’re still talking a couple of weeks if you want to do the surveys and searches. We’re talking megaseconds here, so the integration time is 12 orders of magnitude  bigger for houses than for stocks. The index is also integrated over a wide geographical area, further smoothing things. Let’s take a butcher’s hook at how that all panned out for a little over over my house-buying career to see the difference. Fortunately they tracked over that nasty little heft in 1989, so the picture is still accurate over exactly my house owning career 😉

    house prices relative to the FTAS since 1985 (both normalised to 100)

    house prices relative to the FTAS since 1985 (both normalised to 100)

    I normalised both to 100 at the outset 6. You can immediately see there are whole chunks of volatility, though the FTAS got first out of the starting gate and stayed waaay ahead for 10 years, before taking a gut-punch in the dotcom bust. You’ve have been sore to have taken out an ISA-backed mortgage in 2000, though dividend payments would have made you less sore than this chart shows. And you’d have been buying through that 2003/3 suckout, so perhaps you wouldn’t have suffered too badly. I take Monevator’s point that the dividend income probably matches the rent you’d be paying on the house you wouldn’t have bought if you went the rent and save into an ISA route, so sticking with the capital values is probably okay.

    Housing is  an easier ride, n’est’ce pas? Your share man rings in the millennium in 2000 thinking ‘Holy cow, I am Riiiich’ only to crest the peak and suffer a gut-wrenching almost halving of his net-worth. Whereas me, I’m still sore about having crested that tiddly little lump in’89 on the house price index. What’s up with that? Well, the reason is that a house is a leveraged play, because most people buy their house first, before they can afford it. I borrowed 80%, so all of a sudden that suckout is money I didn’t have. It was until 1999 that prices returned to their previous 1989 heights. I still ended up paying down murderous amounts of negative equity before I moved. Yes, I gained on the new house and the nominal value is up, but this is not a hit you want to take in the first five or ten years of house ownership. The younger Ermine paid for a lot of the housing wealth of the older Ermine at a time when it was hard to do, and it’s not like the older Ermine can realise that cash and go on a bender with it even now.

    Let’s take inflation 7 out to level the playing  field. Here we see in real terms our stock-market playing fellow really did take a 50% crunch high-to-low-water mark. He’s generally had a bumpy ride all round.

    inflation-adjusted version, normed to 1985

    inflation-adjusted version, normed to 1985

    No wonder Brits are in love with property, eh? So much in love we want to stick a quarter of our working lives into bricks and mortar. Life would be a lot more fun if we didn’t do that, and spent it all on holidays, or not working so much and spending time with our children, after all, Warren Buffet was right about gold, it doesn’t actually do anything for you, and nor does most of the cost of your house – a builder can build or rebuild it for a fraction of the purchase price.

    25 years of beach holdidays

    25 years of beach holidays vs 10,000 bricks? Nah, we’re British, we’ll just take the bricks, thanks all the same…

    Brits aren’t any richer nowadays because we stash more of our lifetime incomes in housing, we can stash more of our money in housing because we are richer, so we don’t have to spend it on food. But it’s still a stupid thing to do with our increased wealth, compared to spending it those holidays or extra time with our loved ones.

    But that’s what we’re gonna do, because that’s how Brits feel about property. If we had US style home loans without recourse then house prices would be cheaper because mortgage companies wouldn’t lend such stupid amounts as they know they’d often take the shaft with jingle mail. They would come up with some other types of tomfoolery to make a mess of things, like, er, lending money to people who are obviously so poor they can’t pay it back, and then obfuscating the sleight of hand with derivatives…

    Now an Ermine has to hold a lot more cash than if I were working or even a pensioner, because I have no means to earn more money in the short-term to make up for a one-off hit. Someone earning would be able to borrow that money and pay it back from earnings, but I am my banker of last resort. And I hear that the Government is doling out free money to underwrite the mortgages of people that shouldn’t be able to get mortgages, because they are overpaying for their houses. So they will overpay for their houses, and house prices will go up, nominally. And my cash holdings are taking the shaft from the piss-poor interest rates on offer and the high rate of inflation that the Bank Of England is setting to discharge the national debt by making it worth less in real terms.

    So I want some of that. And I could use the diversification. Look at that chart – there are significant periods when stocks outperform residential property, and significant periods when the converse is true. But I don’t want to buy a house, so I am SOL on that, and three years is too long for spreadbetting. There are three other ways to get exposure to the market that I know of –

    Buy To Let. No. Not doing that. Diversification means you need to sometimes buy asset classes you detest. Buying so much of them as to make it the largest holding is something else, however – I don’t have enough money to get the asset allocation right, and even if I did I don’t want the pain. I’m an engineer, and introverted to boot. Why the hell would I want to set up a business and deal with stroppy people?

    Hearthstone – a unit trust 8

    Castle Trust – their Housa product

    Both have their own problems. Hearthstone seems more honest, in some ways, they buy and rent accommodation to punters on AST tenancies. It’s like being a partial BTL landlord without most of the hurt and the meatspace interaction with stroppy fellow-humans. If Britain is going to move to a lower-owner-occupation model then more professionalism is something I have been looking to see for a long time – the fact that you are dealing with amateur landlords is part of a lot of the hurt that being a tenant in Britain seems to be about. I have a very low opinion of Britain’s army of amateur BTL landlords, mostly from my own early experience of amateur landlords – step forward one of the more egregious examples Mr Uddin from Acton whose bright idea it was to wire the shower to the lighting circuit, ‘cos the shower was on the top floor so it was more convenient. Punk. If you don’t know why that’s a bad idea you shouldn’t be a BTL landlord. End of. This douchebag also stole our deposit in addition to trying to kill us with the melted power system.

    Professional landlords will have enough scale and expertise to have or hire their own maintenace and facilities management teams who hopefully will have the expertise to do this properly and to a more even standard. However, Hearthstone buy new and nearly-new houses, and I am prejudiced against new houses because of the secondhand depreciation effect. I have never understood why anybody would buy a new house – the premium is off the scale and the sound insulation sucks, you have tiddly rooms, no storage and eyeball to eyeball with your neghbours. On the other hand car rental firms only use nearly new cars so perhaps there are issues for professionals I have never experienced.

    Castle Trust have different issues. Their proposition is easier to understand – match the Halifax House Price Index, and the way they aim to achieve this is very much like Help To Buy, by lending to individuals, So the risk is obvious too – some of those individuals will get slaughtered when they lose their jobs/get divorced/have children/interest rates go up. There is a secondary risk in that Castle Trust is a derivative investment so there is counterparty risk as usual.

    Castle Trust have latency issues – you buy effectively a bond benchmarked against the Halifax index for three or five years. The three year one matches Help To Buy very well so I will probably dip a claw into this. I’m not going to put a lot into this, but I want some of Osborne’s money since he is planning to helicopter drop it on the toxic UK housing market to buy himself some votes. If interest rates go up in the three years then although I will eat a loss on this (and consider shorting it using IG Index!) I will actually be able to turn a return on my cash holdings.

    BTL will be more lucrative if that’s what you want

    BTLers, specifically those doing BTL on an interest-only mortgage, which I presume is nearly all of them, will do much better if house prices go up. That’s because they are using leverage, effectively betting the farm on house price rises. They also get the benefit of charging the interest payments on the loan as a cost of doing business, reducing their tax liability against the rental income. I don’t need leverage – my worst case outcome is that Castle Trust goes titsup and I get to write off my stake. A BTL’ers worst case is he becomes a forced seller selling into a dead market for less than he paid. And goes bankrupt, it’s the old risk/return conundrum. I’ve had the experience of owing more money on residential property than the asset was worth, and I ain’t going  there again.

    Government pork and diversification in small chunks

    But as a way to stick a paw in this cesspit of quasi-religious British belief, and in particular to hold a claw out for some Government pork, I’m prepared to take the risk to a small extent, and see how it goes. The great thing about these is the subscription requirements of Castle Trust and Hearthstone are modest – like any other asset class you want to drift in and out of it over time. You don’t normally have the chance to buy or sell a house in small chunks marked to market each year. The Government pork has its own attraction, though any market that has the 900lb gorilla of the government charging about it buying votes is susceptible to unintended consequences. There is mixed opinion – in some quarters there’s the view that Castle Trust could be destroyed by Help to Buy and in other quarters that they may work well with it. They certainly seem to be the more exposed to getting hurt by the unintended consequences of Government action, because Castle Trust is very much more a pure play on the house price index. Hearthstone’s model is less susceptible to that, though if rent controls ever started to catch on in Britain they would be in trouble, whereas Castle Trust could just make their mortgage holders eat the cost of capital misallocation along with their investors.

    I’m not an expert of UK residential property. But I’m going to take a punt at some point, because I’m tired of the Government’s high house price strategy being bought at my expense. It’s a punt for me, but God help the poor bastards that have to make this call in terms of buying a house. There be dragons in this market, been there, eaten the crow. Wouldn’t it be nicer if we all used our higher wealth relative to the 1970s in having more holidays or working fewer hours rather than foolishly always ramming a quarter of our lifetime earnings into a house? Yes, but the market’s made of other people, most of whom seem to want higher house prices rather than more leisure and fun. Beats me why, but “the market can stay irrational for longer than you can stay solvent”. Poor old John Maynard Keynes, eh. He just didn’t reaise just how powerful the Gollum-esque evil heart of avaricious darkness is that beats in each and every British homeowner. He believed

    When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease … But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.

    Hmm, it didn’t pan out that way, bud.

    Note that both Castle Trust and Hearthstone are complex, they are new, there’s an awful lot not to like about each of them as well as some things to like. For God’s sake do your own research before you even think about it. They aren’t proxies for a house deposit because of the latency, because of the wide geographical integration and because they’re about more than houses. Here be dragons!





    1. when I graduated at 22 the working life of a white-collar worker was 38 years. But in compensation you will live a lot longer than me 😉
    2. I know that a lot of today’s young ‘uns seem to expect to buy in your twenties, in the belief that everyone used to do that, but they didn’t. I was nearly thirty, and my Dad was older, when we respectively bought our first houses. Loans were much harder to come by and you were expected to have a deposit and repay the mortgage I really don’t know where that expectation came in, and you’re more likely to switch jobs and move in search of better opportunities in your early career, which mitigates against home ownership.
    3. that means no interest-only mortgages, unless you are saving the capital in a different asset class
    4. this is a hand-waving argument in that inflation halves the value of money every 15-20 years. You will pay about three times the nominal sum but a lot of that will be in money that is worth less, provided your income keeps up with inflation
    5. I am unreconstructed enough to believe if you have a mortgage then you don’t own the house. However, you are mad if you own a BTL outright because you could be running more BTLs by using leverage and other people’s money, it’s a business, not a home. I still wouldn’t say I own it
    6. I pinched the house price data from the Nationwide (the Halifax doesn’t have historical data AFAICS), And the FTSE All-share from Yahoo
    7. That’s RPI inflation, because we all know that CPI inflation, though it is technically more correct with geometric means is fudged shitless by governments to pretend that they aren’t printing money to pay for all those goodies that voters want but don’t want to pay taxes for
    8. It’s actually a Property Authorised Investment Fund  investing in residential property, rather than a unit trust, though it has unit trust wrappers available too
    22 Mar 2013, 2:01pm


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  • Help to Buy = Moral Hazard. What on earth could go wrong?

    On Monevator, there’s a good and spirited discussion has taken Help To Buy apart in detail. So this is just a rant, since despite imploring Cameron not to fight the tape last year, he’s actually taken a bastardised concept that at least had some merit – favouring the first time buyer, and compounding the mess.

    The housing market in the UK is deeply and fundamentally f*cked up. There really is no other way to describe it. It is a world of hurt for an awful lot of people, and there is no excuse for the Government criminally acting on behalf of a small proportion of the population that seems to hold sway over policy.

    Let’s look at some of the facts. Only half of owner-occupied houses in the UK are owned with a mortgage 1. Assuming that tenure applies to adult occupiers, there are about a third of occupiers who rent in some way and another third who own outright. These latter two groups are taking the shaft from a high house price policy.

    The renters are taking the shaft because a significant proportion wants to buy, and the ones who own outright are taking some of the shaft indirectly because they are old gits whose savings will be destroyed by the inflation being unleashed by the money printing used to drive interest rates down, so that damned fools can be persuaded to overpay for houses.

    And now the Government now wants  to assist those fools in paying even more for houses. And I am hopping mad. Because I don’t want to go through the next depression when the music stops and our money is worth jack shit. At the very least it is rude or the Government to push the stick forward into the next housing-related financial crisis before we’ve done with the current one!

    I hold too much cash as it is. I am starting to consider taking some of the Governments blasted money and mortgaging my own house. But then what do I do with the cash? What on earth holds value in this stupid world of make-believe? Where do you put it? In Euros thieving barstewards want to have at 10% of it, or more if they please, I don’t believe the US debt will do foreigners any favours when the chips are down. It is like we are living in end times, everything shimmers and nothing represents real value or a true claim on future human work.

    60% of people living in houses don’t benefit from high house prices. We don’t need a crash, but we don’t need tosspots trying to inflate prices, leave ’em be and let the invisible hand do its stuff. Oh and if you are thinking goody goody the government has made it easier for me to own my own home, then perhaps you should read this cautionary tale. I walked away from half the price of my first house and all of my 20% deposit, more in real terms, ten years after the Lawson boom of 1989. House prices do not always go up. And the longer they have been inflating, the bigger the bust.

    The tale won’t do any good. I didn’t believe people in 1989 when I stupidly overpaid for a house. You won’t believe me. But what really, really, pisses me off is having to pay for your stupidity in the years to come when we have the strings and violins playing for jerks like this, who will then claim benefits for their unsustainable lifestyle. I had to pay for my mistake myself, one sodding pound at a time.

    Oh and one other thing. Pay your damn capital down, either via a bog-standard repayment mortgage, or via parallel investment systems like a S&S ISA or wizard wheezes like Monevator’s better way to buy a house, though in the latter case have the damn self-discipline to make it work – no splurging on having too many kids or foreign holidays.

    Look ahead of you. The power balance in Britain is shifting away from labour to capital. Do you really want to commit so much of your future earnings to buying an illiquid asset at a spectacularly high price? There are better things to do with the fruits of your labour than to sink it into ten thousand bricks and a postage-stamp plot. It’s not impossible to imagine a Spain like property scenario here. As the Germans say, the good Lord sees to it that the trees do not grow into the sky. If house prices get inflated then the value of the money will be destroyed. The rest of us, that’s the 66% who either want to hold on to wealth to live on in our old age or build it to be able to pay our rent passively, will have to invest – in stuff, anything that pays some return and is reasonably nailed down in reality for when the results of this arrant stupidity come home to roost. There aren’t enough real assets in the world to compensate for the make-believe of house price inflation.

    The tragedy is that if you need Help to Buy, you can’t afford a house. Look at the graphic in Monevator’s post. You are trying to buy a £200k house, so you save 10K and the Government loans you 40k interest free. You go whoopee-do because you can now pay 40k more than you could before. So you go to the estate agent and offer 20% over  the odds, because you now can, and because your brains fall out when you are British and buying your first house. Just like mine did. You have just increased your capacity to overpay by 400%, so you will lever up by 20%.

    As it says on the tin

    The Government will lend you up to up to 20% of the value of your property through an equity loan, which can be repaid at any time or on the sale of your property.

    Where’s the small print, then? You are going to buy this when money is tight, kids may be on the way, oh and we seem to be stuck in a never-ending depression where everybody ends up working part-time. In three years the scheme will end, and all of a sudden people won’t be able to overpay for your house when you have another babe on the way and need to step up. What’s going to happen to house prices then, eh? If you’re lucky interest rates will still be on the floor, though if there really is a recovery then they won’t be, which will reduce what people can pay for a house. You’re going to have a barrel of laughs if you have to move for work, and discover that people don’t want to pay you as much as you paid. All of a sudden you find you’ve geared up your losses, from 10k to 40k. Of course, the Germans might be wrong and house prices will go up, and up, and up like Jack in the Beanstalk. You have to ask yousrelf, though, where will your buyer get the money from? If they don’t inherit it, they have to pay their mortgage from net income, and the IFS indicates taxes will have to rise in the UK to reduce the deficit (that’s right, the deficit. The debt is a lost cause). If taxes rise they will find that harder to do.

    If prices don’t rise, you will find out what I did – it’s damn difficult to repay a mortgage if the asset you bought with that loan sells for less than the loan, because unlike in America, mortgages come with recourse in the UK – they chase you for the money you owe. How do you repay that? You take your salary, and throw some of it into a black hole for which you get nothing in return. I’ve been there, done that, and believe me, it was no fun.

    Help to Buy would have totally shafted me. Instead of paying down about 50% of the addle-headed price I overpaid for my first house, I’d have ended up paying down about 65% of it. Wow. What a fantastic deal!

    And you know what the worst thing about this is? If you are unlucky enough to be in your early thirties and looking to buy a house, you’re going to have no choice but take the Government up on this deal. Because every other stupid twit is going to, so even if you know this is a mad thing, you’ll either have to pay over the odds using the Government’s money or stick your life on hold for a few years as far as buying a house is concerned. That’s easy if you’re young, free and single, but not so good if you have a pressing need for more space now.

    So I have one question to ask Dave.

    Why are 60% of adults paying taxes to shaft themselves in favour of the 30%, who will find out they also took the shaft when the scheme ends?

    What the hell is up with that? If the Government wants to spend money on housing, build council houses. And employ a Keeper Of the Commons, so that when a politician like Thatcher comes along and wants to sell commonly paid for assets to buy herself some votes, the Keeper of the Commons pulls out a silver revolver and holds it to their head with a wizened skull in their left hand as a memento mori. And asks them if they really, really, want to do that. If the answer is yes, then pull the trigger and invoke an immediate General Election. Reloading the revolver before the next cynical vote-buyer has a chance to get elected. There needs to be real and serious penalites for politicians buying votes now with the common good of the future. Thatcher did the British housing market a world of hurt by flogging off the housing assets that had been built with the common effort of the post-war generation so people would vote for her again.

    It really is high time the British government butted out of the housing market. Every time they touch it, something about it gets worse for more people than benefit. Is that really the job of government in a democracy, to favour a minority at the expense of a majority? There are better ways to improve housing in Britain. There’s no God-given reason why so many people should aspire to owner occupation. We do in Britain because decades of Government policy, starting with Thatcher, have either destroyed perfectly decent alternatives (council housing) or made them so horrible, like renting from amateur BTL landlords who bodge repairs – my London landlord fitted the electric shower to the lighting circuit, for chrissake. Renting in general on shorthold tenacies with no long-term security of tenure is no fun. At least if you rent from the bank, as any of you with interest-only mortgage are doing ,then at least you get a few years security of tenure 😉 If the Government can’t make it better, then at least they ought to observe the Hippocratic oath, and do no harm.

    Too many people borrow too much money in this country to overpay for crap to live above their means. Higher house prices are part of the problem, not part of the solution.


    1. before anybody boils my head for the fact that 31% is not half, note that all owner occupiers are 66%, and the non-mortgaged guys are 31%, a shade under half
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