Credit Drives Up Prices
Some people are entirely to blame for their situation because they embarked on irresponsible spending funded by irresponsible borrowing. These I would argue are a small minority because borrowing for essentials such as housing and transportation is not irresponsible. Against a background of housing shortages, in areas where there are jobs available to support the borrowing, it is inevitable that house prices will keep rising.

Planning Laws Have Restricted Supply
With supply restricted by planning laws prices will rise to the point they are restricted by the amount people can borrow rather than the healthy balance of supply and demand. Housing is an essential and the majority of people will therefore be forced to borrow the maximum they can to own property. With the expectation that house prices will rise they mistakenly see this as an investment.

Your Own House Is Not An Investment
A house is only an investment if you don’t need to live in it yourself; if you do live in it, then you cannot sell it without buying a replacement in the same inflated market.

With a repayment mortgage it is a form of savings plan and with interest only the consideration is if interest is less than the rent for a similar property. If it is less, then the difference with self-discipline, could also go into a savings plan.

The only real way to invest in a house you live in is to improve it by spending less than the base, non-inflated, value of the house increases. The building of more houses nearly will, it is feared, decrease the value of a house and is the reason Local Councillors are under such pressure not to allow the building of more houses.

The Problem With Building More Houses
The second string to this issue is the one nobody is talking about. What would happen if we totally relaxed the planning laws, taking away the control of the Local Council so developers could build as many homes as they wanted? We might anticipate there would soon be over-supply and house prices would fall. What would then become of those people who had purchased high-priced houses with unsustainable debt?

Yes we would be facing another financial crisis bigger than we have already seen. For this reason it is not currently politically acceptable to allow house prices to fall. If they show signs of falling, politicians take action to increase the supply of credit to re-inflate the bubble. How then can they really countenance a major increase in housing supply? You can see the trap into which our economy is inevitably falling.  How can we get away from the position where the goal of politicians is to keep house prices rising, but slowly?

We Don’t Really Own our Property
I own a house and land in Surrey Heath. It is really a misnomer to say I “own” it because it is in Surrey Heath, I can’t take it out of Surrey Heath and Surrey Heath Borough Council tell me almost exactly what I can and cannot do on it. I don’t own the minerals beneath it and have little say on what goes over it. Surrey Heath then charges me for having it there. The reality is that all land and housing belongs to the Country and what we call ownership is just a different kind of lease. I make this point to try to take the emotional sting out of what I am going to say next.

Property is a National Asset And Debt Secured On It Should Be Nationalized
The headline would read “Calls to Nationalize all the Property in the Country”. This would though have very little impact on who occupies what.  I have already said, property is already a national asset. What it would do is move all the property debt to the State. The “owner” of any proportion of a property not encumbered by debt would have to be compensated but against this everyone would have to pay rent for what they occupy. Those who own a large part of their property, typically older and retired individuals, should see a net income for themselves and their dependents rather like an equity release scheme. Those with limited equity in a property will have to pay rent initially equivalent to their mortgage but over time this debt will have to be written-off and the rent reduced to take these people off the critical list where their finances are concerned.

It would be possible to only nationalize properties in negative equity or with more than a certain amount of debt secured on it.  However this would be arbitrary and difficult to carry out fairly.  It would also hurt those who owned a house outright, possibly expecting to use it as a pension, to have the value of the investment (savings plan) suddenly reduced.  The State must be fair and pay everyone the honest current value of their property.  This can be in monthly installments whilst they continue to live in it.

I don’t like the idea of the State taking on this task or resolving property debt and would prefer this task passed to the Agencies I would prefer to see people employed by (See my EMPLOYMENT page). In the absence of these Agencies, financial institutions or professional landlords could be tasked to offer schemes that will replace the loss of their mortgage and rental business.es

Property Values Will Continue To Change
Once the State, or other body, has set the rent for a particular property they will continue to change hands and some people may be tempted to collect a premium in the sale where a rent is considered to be too low. If this becomes a problem, the rent can be simply increased.  If the occupier has improved the property to raise its value the State must compensate them before increasing the rent. The converse would apply if the property has been damaged.  With everyone renting and housing stock centrally owned housing supply can be increased as an investment in the future for the Country.