From: mmh@cs.qmw.ac.uk (Matthew Huntbach)
Newsgroups: soc.culture.british
Subject: Re: Currency problems
Date: 13 Oct 92 08:25:15 GMT
Organization: Computer Science Dept, QMW, University of London, UK.

From: riaedwards@halls1.cc.monash.edu.au (AUDREY EDWARDS)
>2) More contraversially, mortgage interest relief (a subject I know
>something of, as a solicitor acting for building societies in the UK).
>MIR at present is paid on interest only after 6 months of claiming
>benefits. At that stage, it is likely arrears have built up to sufficient
>levels to justify an application by the mortgage lender for repossession (
>the courts have discretion only to delay it for a short period). BS's are
>at present content to accept the interest payment only, as there is no
>market for the repossessed houses, and it is looked on favourably by the
>government. If MIR was abolished, then considerably more repossessions
>would occur ( the BS's own view based on the statistic that at present it is
>calculated that over 10% of mortgages are in significant arrears due mostly
>to redundancy, the drop in house values preventing sale, and the break-up of
>families.) As there is little council housing left, and very little
>private renting (especially for families) there is the very real possibility
>that the abolition of MIR would lead to an great increase in homelessness
>and the consequent social problems. So perhaps MIR is a very cost effective
>insurance!

She meant, of course, the payment of one's mortgage interest by
the Dept of Social Security, not "Mortgage Interest Relief". One
obvious unfairness of the situation as it is currently set up
is that one gets this payment only if unemployed. Thus it is a
huge disincentive against finding work. Very unfair to those
who have taken cuts in income but are still struggling on
trying to pay the mortgage and keep a job.

Now I really don't see why those who were able at some time to
con a building society into thinking they were financially
secure should be given such assistance in acquiring an asset.
My feeling is that these payments should be made in the form of
part-purchases by the state in the equity of the house.

>Actually, considering the popularity of MIRAS amongst the general
>population, I wish you luck in trying to get rid of it!!!

This time she really does mean MIRAS. The "popularity" of MIRAS
is really due to people's lack of understanding of the free
market. A blanket subsidy to anyone buying property simply
means that they can afford to bid more and prices will rise
accordingly, thus contrary to the popular belief, it does not
"help people buy houses". Imagine that the government decided
it would be good for everyone to own antiques, so instituted a
scheme in which it would pay half the price of every antique
brought. Anyone at an auction bidding say #1000 for an antique
would know that he would only really have to pay #500. He could
therefore bid twice the amount he could otherwise afford, as
could everyone else at that auction. The net effect is that the
price of antiques would double, and the only people to benefit
would be those owning antiques and wanting to sell. MIRAS works
in exactly the same way, it is simply a way of doling out
tax-payers' money to those who already own property.

Matthew Huntbach
Newsgroups: soc.culture.british