Philobiblon: How the "other half" live

Thursday, April 13, 2006

How the "other half" live

Living on a council estate, you get occasional, sometimes shocking, insights, into how the "other half" live. I just had pushed through my door as junk mail a "refinancing offer" from a finance company, offering rates of 15.3 per cent on secured loans on a property, and 8.1 per cent on secured mortgages (both of those would be "average" figures).

Pretty bad, although I suppose fairly par for the course for people with bad credit records, County Court judgements etc. But then reading the fine print, I found that "there will be a fee for mortgage advice ... normally 3% of the mortgage balance". Three percent of what is probably near the total value of a home, for organising the mortgage! (And nothing specifies if this is still applied even if no loan results.)

This is the underbelly, the dark side, of Thatcher's "right to buy" revolution, and indeed London's property revolution, on which Anatole Kaletsky is writing today. Some "right to buy" people have done very well out of it, but some have been left with crippling maintenance and general debts, and end up with no equity, and no home.

Kaletsky concludes that London's property market has largely been decoupled from British economic performance, because the city's economy is so dependent on the global economy, but that it reconnects through people selling their homes here and moving out to the rest of the UK. Fine if you've got enough equity to do it.

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