From The Property Wire
“Two former Bank of England economists are urging the UK government to buy homes that are about to be repossessed in a move estimated to cost £50 billion over five years.
Shamik Dhar and Danny Gabay argue in a report called A Truly Unconventional Monetary Policy for the UK that helping those who are falling behind with mortgage payments is not enough.
The pair, who now both work for economic consultancy, Fathom, say that property acquired by the Government under such a scheme would be bought at a discount of between 10% and 20%, with the former owners able to rent back the accommodation and stay in their homes…..”
MMM, not sure I get this, surely all attempts to buck and distort a market are highly susceptible to failure by just pushing the problem along? My simple surveyors brain (that’s why I’m not an economist) says that the government will end up with property at 20% under market which it will later sell back to the private sector at 20% under… plus if you know your repo will be effectively underwritten by the government and you can then rent it and buy it back later why not stop paying the mortgage right now?