You'll own Nothing and We'll SEIZE It! transcript

When they said that you will own nothing and be happy, one bit that they left out which they are now saying out loud is that they will seize your property to do it and they will own part of your property when they encourage you to buy it. This is absolutely extraordinary. So for more detail on this, please do subscribe to the channel. This is my money channel. I am Daniel Shenmith. I am the black belt barrista. Obviously I'm a barristister, but I'm also a qualified mortgage adviser.

I've been in business for over 30 years. I will tell it to you as I see it. If that sounds of interest to you, please do subscribe to the channel. So, here's the short version, but do stick with me for the long version because it is quite extraordinary. So, Labour's big solution to this housing problem boils down to two things. One, using taxpayer money to subsidize the purchases so they will own part of the property from the beginning.

While at the same time, wait for this one, senior figures are now saying that they are openly talking about seizing homes that have been left empty for several months. So, on the one hand, they are helping people get into a property or getting into debt whilst buying a property that they might not be able to sustain. More about that in a minute. Whilst they will own part of it, the state will own part of that property.

And at the same time, if someone has worked hard to buy another property, a second home, and it's left empty for a few months, they want to seize it from you. How about that? It's just absolutely extraordinary. So, we have Emily Thornbury, who has just essentially set this out in plain English, so there's no hiding from it. There's no sort of saying that's not quite what we meant. She said quite clearly, and I want you to read it for yourself, her exact words, because I couldn't have made this up.

She said, and I quote, "I said it in 2020, and I'll say it again. If you leave a home empty long-term in the middle of a housing crisis, it should be seized." Today's announcement is great news, she said. and she's quoting where she says that she's vowed to seize empty homes in a bid to tackle the housing crisis. Now, note that she used the word seized, her word, not mine. So, let's think about what that actually means in practice.

You've worked hard, you've saved, you've paid the stamp duty, the taxes, you may have paid the mortgage off, or maybe you've inherited the property, but either way, you've either bought or inherited a property. Then for whatever reason, and there might be many reasons, it sits empty for a while. Maybe you've inherited it and you're sorting out the estate and it takes time and you're deciding whether to rent it lent it out or to sell it or whatever.

Maybe you're renovating it. Maybe you're working abroad for some time and you know, you're in between stages of your life. You know, maybe it's between tenants and you just haven't found the right tenant yet. There's a whole load of different reasons why it might be sitting empty. The response from senior labor figures is now is that should be seized because it's been left empty for a while. So thinking from a lawyer's perspective for a moment because this is obviously really important to a lot of people, your right to own the property and to hold it and to keep it and not have the state take it from you is one of the most fundamental protections that we have in law.

It is woven right into the fabric of our law going back as far as you can find in our human rights framework. All the rest of it, the state seizing private property is an extraordinary draconian power reserved quite rightly for extreme circumstances with very he heavy safeguards. Now there are some provisions that it can do that already. But there are a lot of safeguards and it is a very heavy burden. But those saying now that they should be able to seize it just because it is empty and flagging that as great news should be alarming to everybody.

This is the state saying great news. We can take somebody's property just because it sits empty. There's an excuse for us to take it and for us to take it as the state. On another note, you might have received an email that looks like it comes from TV licensing telling you that your direct debit has failed and you need to input your payment details otherwise you might face a fine because they've got all this information on you.

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The link is in the description below. But like anything else, these rules can be bent and changed once they're in place. How long is long-term? Who decides that? And is there any compensation? You know, and what what's the appeals process? And where exactly is the line between you holding it for a good reason and them saying, "Well, we are going to take it because it's empty and we want to do something with it." Now, a property being empty for a few months for any one of a number of valid reasons and then being seized by the state should be two things very far apart, not spoken in the same breath, and certainly not pushed out as great news that someone can just lose that house because it sat empty for a few months.

But the other point is this. We have now the 2 and a half% deposit scheme being floated around, which is another way the state's going to own part of your home. Being dressed up and sold to you or to first-time buyers is a great idea, which being cynical is really another way of propping up the house builder market and the stateowning part of your home. And long-term, they will own many more of those homes. And so, let's have a look at that as well.

Now, this is where Andy Bernham has said, and he's not wrong in principle on the diagnosis, that a lot of young people have simply stopped believing that they will ever own their own home. Now, the government's answer here is yet another scheme where this time you only need around 2 12% deposit. The government covers 20% of the purchase price with an equity loan and you get a mortgage for the rest. So, two debts and you only need a 2% deposit, which in my view has a bit of a problem attached to it as well.

Yes, it helps people buy it, but it comes along with a bit of a problem. Now, it sounds generous on the surface because you get on the property ladder but with a small deposit, barely any deposit really. But when we look at this properly, we've actually seen this many times before. And from my days as a mortgage adviser, I've seen the fallout from schemes like this. So this in my view, my somewhat cynical view is a rehash of the old help to buy equity loan scheme with the same essential structure with a small deposit, government taking on the equity stake in the property.

You take on a big mortgage. If it all falls apart, well, the government doesn't lose out because they've got the equity in the property. You might lose out in your credit reference and your uh deposit and everything else. But here's what people actually looked at with the last version once that was concluded. Now, the help to buy scheme did help some firsttime buyers, yes, but it did not really make houses any cheaper, and it certainly didn't fix the affordability problem in London.

What it did do was hand the government a nice profitable book of equity of these properties and it also handed the big house builders higher sales, higher prices, higher margins and ultimately propped up the building market. So a lot of this help really leaked straight into higher house prices and developers profit. Not really what it was intended for, although you know it did help some people out to get their first property.

There'll be a lot of sort of success stories in there, but from my experience, my knowledge, my personal knowledge, there are a lot of sub stories as well. And in fact, the honest summary of all of that is this. It's helpful for a few firsttime buyers who can service a mortgage but can't afford the 5 to 10% or more deposit, but it is not a structural or systemic fix. It risks repeating exactly what the help to buy did, favoring higher income households, new build premiums, and the state as a co-owner to your property with only modest really extra supply and the leakage on those prices going upwards, meaning they will get more expensive in the end.

All the while ignoring the politically inconvenient problem of high levels of immigration, which means that there's a housing shortage. And where there's a shortage, obviously bumps those prices up. Now, the 2.5% deposit figure is politically fairly clever. It looks attractive. It grabs headlines. But when you look at the detail, the question really is whether this is just a tighter scheme or just a help to buy with better branding and packaging.

So, the income caps, the price caps, the developer fees, and all of that arrives in October. So, look out for that when we get all of the detail finalized, and we'll see what really happens. But there's a deeper problem here. This is going back to my mortgage advisor days and my experience with the public and with what really happens. So, let me give you the benefit of some of that experience because before all of this, I spent some years as a qualified mortgage adviser sitting across the table from these actual buyers, people in these real positions dealing with the developers and the sales and everything else.

And so, here's the danger really that no one in government actually wants you to know about, to talk about because it flies in the face of all of these schemes. Now, when you barely have to save for a deposit, and two and a half% is hardly a deposit, then you don't really have much skin in the game. And as I saw time and time again, people who got into a property in this way, then couldn't for whatever reason couldn't sustain the mortgage payments and everything else, they simply walked away.

Because thinking about the psychology here, if you've really had to scrimp and save for years or, you know, borrow from mom and dad and whatever to get a fairly sizable house deposit or, you know, were still some, you know, parents were putting it on their own mortgage and reorggaging their own house to fund a deposit for the children's house and whatever, you will fight tooth and nail to keep that property because you don't want to lose the big deposit that you've put in.

But if you put in almost nothing, then abandoning it really doesn't feel like losing very much at all. And some people actually do that and it does turn their lives upside down. You know, they screw up their credit rating for many years and so on. But that is a big part of why we ended up with what effectively were referred to as ghost towns in some parts of the country. roads and estates full of homes from particular builders who had sold them on this help to buy scheme where people had got into them fairly cheaply but then couldn't afford to hold onto it and maintain it.

And ultimately we ended up with whole streets sometimes of houses that were empty because people just couldn't afford it. And this was nothing to do with the affordability criteria of when they first bought the property. They simply couldn't afford to maintain it. You know, their lifestyle changed and all sorts of other things crept in and they just couldn't do it. But also the psychology meant that it was so much easier to give up on.

So I'll make a rather cynical prediction here. I think we'll get a somewhat similar result with this new scheme. Either homes that are snapped up by higher income people anyway, which is not what it's really intended for rather than the youngsters that it is sold to in the first place, or we will end up with more and more abandoned properties like we did before. only this time cynically I think they will get snapped up by local authorities to house asylum seekers.

And that brings us to the big elephant in the room here because none of these schemes actually look at the cause of the problem. They are just trying to fix it by making it cheaper to get in whilst the government owns part of it and propping up the house building market. Now, we can play with figures and deposits and loans and equity and all the rest of it, interest rates all day long, and you can seize empty homes all day like, but the fundamental problem here is the supply.

When you simply don't have enough houses in supply where people actually want to live and on top of that, we have this political debate that no one really wants to have, which is immigration. We have an issue when immigration is running as high as it is, demand for housing and the pressure on the rents all go up relentlessly. And as the government is closing down the asylum hotels, the local authorities are obviously looking to outbid local people to rent those properties or even buy those properties in order to house asylum seekers.

And in many areas, it's been reported that they are ahead of other people on a housing list or all the rest of it. So again, picture this. You've got a local family trying to rent a home in their local area, being outbid by the council using public money for the same property that was once on a scheme that is now in direct competition. And a real world reason behind it is the increase in demand, much of which down to immigration and asylum seekers.

And so bringing all this together, we've got two halves of this story, but only one of which you are being told. You're being told that the housing plan is to make it easier for you to buy properties and so on, whereas really the housing plan is using taxpayer money to subsidize people getting into debt for homes that they might not be able to afford that are not in many cases being built in the areas that they actually want to live because the supply is too low, the demand is too high and immigration is too high.

And simultaneously they are talking about seizing homes because people have left them empty even though they've worked hard to own them or their parents have left it to them in a will. This in my respectful view is not a coherent housing strategy. This is treating the symptoms with another headline, another figure, another way of tempting people into the housing market. whereas in reality it is just another way for the government to seize more of it, own more of it and control more of it in the ways they want to do.

So whilst this is being sold to you as headline grabbing great news, think twice because you really need to plan this out for the next 5 to 10 years. If you've got two different debts, one of which to the government for its uh equity stake in your house and another to the mortgage company, what if those interest rates change? And what if your affordability changes and then you simply cannot afford to keep paying both?

That is what we saw last time for some people and I suspect that is what we'll see again. Let me know your thoughts in comments in the box below. Please do subscribe to the channel. As always, thank you for watching.