FTB negotiations on new build

benood

I think the rule of thumb is 1/3 of price is land value, 1/3 is build cost and final 1/3 is profit - on this basis £58k of the asking price is profit for the developer - if they are starting to be squeezed really badly by their lenders then they'll be seeking cashflow above all else - it's not impossible they'll forgo their profit completely (rather than go broke). That implies you could be aiming for about £120k! Rather cheeky and you risk being labelled a timewaster but you never know.

Also are you buying off plan? The rooms will be smaller than your perception of them on paper.

Chris2685

If they are seeking cash flow, then shared ownership is probably not the way they would go, unless the HA is offering them cash for their share. Shared ownership implies that they will only be making rent from the share that is effectively unsold.

As I said, unless it is being bought through a HA and not a developer.

geoffky

Firstly Ask For The £30thousand They Are Overpriced Off Then Start There..

geoffky

http://forums.moneysavingexpert.com/...html?t=1070161

HAVE A READ OF THIS BEFORE YOU DO ANYTHING

02-08-2008, 12:42 PM #10 Richard Webster vbmenu_register("postmenu_13001735", true);
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It'll be 25% of the valuation at the time.

So you buy a house allegedly worth say £200K and take out £150K mortgage. You owe 25%. In 5 years time:

If the house is worth £300K then you will have to find £75K on top of your existing mortgage - total mortgage £225K -only 75% LTV (loan to value ratio) but will you have sufficient income to support the loan?

If the house is worth £220K then you have to find an extra £55K but that makes total borrowing of £205K - 93.18% LTV. Will a remortgage/further advance for such a high LTV be available then?

If the house is worth £180K then you have to find another £45K - that makes £195K borrowing - and negative equity, so you can't borrow it.

Therefore this is a highly dodgy scheme and I would never advise any buyer client to touch anything like this with a very long bargepole - it is far too risky.

Anyone buying a new house needs to think about how the house will be valued in comparison with other similar houses in the area that are perhaps 5-20 years old. In 5-10 years time will a buyer be that concerned that your house is only 5-10 years old when another, that is say 15 years old, is priced at £20K less? The differential builders put on because the house is new will not necessarily be sustained in the future. Builders try to make it difficult for people to make comparisons by building flats in areas that haven't had them before or imaginatively creating different house types like Town Houses or Link Detached that don't have immediate local comparisons so potential buyers get confused and pay over the odds.



RICHARD WEBSTER

As a conveyancing solicitor I believe the information given in the post to be useful assuming any properties concerned are in England/Wales but I accept no liability except to fee-paying clients.
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neverdespairgirl

piefacerecords wrote: »

4 more years of renting = about £35k of dead money.

This "rent is dead money" line really irritates me. It's not just chucking money down the drain, it's paying for a very valuable service, a roof over your head!

piefacerecords wrote: »

You can't be serious telling me that 4 years time, a nearly-new 2 bedroom apartment with private parking in the middle of Brighton is going to depreciate so badly that it would have been more worthwhile to rent and wait and rent and wait

Why not? What's this rule that a flat (it's a flat, don't fall for the marketing "apartment" stuff) has to be worth in the future what you pay for it now?

tootiefrooties

I didn't say it would be worth what it is currently valued at, but in a few years time, the situation will remain the same: massive demand for starter homes in the middle of a desirable city. And anyone who's ever lived in Brighton knows that the inclusion of parking is incredibly valuable in city centre accommodation. So yeah, I am prepared for it being worth a bit less, but all the cries of "50% of the value will go within days" simply doesn't apply to such a property - whether it is a new build or not. Compared to similar (non-new build) properties in the area, its entire market value is actually competitive.

I understand that to some people, investment is the biggest issue when they buy a property, but they shouldn't expect that same attitude of everyone else. My main concern is that DH and I can buy somewhere together so that we have the stability and safety of a permanent home before we start a family. And like I said earlier, if it does become impossible for us to sell up because of negative equity in a few years, it won't matter. We are looking for somewhere which will be adequate for as long as we need - and markets do recover! I don't mind waiting around if we have to. Plus (again, like I said earlier...) our income will be more than doubled in 2 or 3 years time, so there will be no difficulty borrowing a high LTV.

If everybody was too preoccupied with their property losing value then nobody would get anywhere - you could buy the "perfect home" in the "perfect market" and still have an incinerator build down the road, or have noisy hooligans move in next door, or any other unforseen situation which will massively devalue the house.

I appreciate that rental money pays for a roof over my head, but why would I choose to pay the landlord's mortgage rather than my own? At the end of it, they will own this house outright and I will have been paying for it. Why shouldn't I pay the same amount of money and actually end up owning a property out of it?

neverdespairgirl

piefacerecords wrote: »

I appreciate that rental money pays for a roof over my head, but why would I choose to pay the landlord's mortgage rather than my own? At the end of it, they will own this house outright and I will have been paying for it. Why shouldn't I pay the same amount of money and actually end up owning a property out of it?

Are you sure you will pay the same amount of money and end up owning it? It's certainly not true in my neck of the woods. Renting's a lot cheaper.

Treadmill

Buying is cheaper than renting a similar property in my area, and a lot of others.

wymondham

Treadmill wrote: »

Buying is cheaper than renting a similar property in my area, and a lot of others.

theoretically yes, but what happens when you factor in those big price drops?

harbinger13

piefacerecords wrote: »

I didn't say it would be worth what it is currently valued at, but in a few years time, the situation will remain the same: massive demand for starter homes in the middle of a desirable city. And anyone who's ever lived in Brighton knows that the inclusion of parking is incredibly valuable in city centre accommodation. So yeah, I am prepared for it being worth a bit less, but all the cries of "50% of the value will go within days" simply doesn't apply to such a property - whether it is a new build or not. Compared to similar (non-new build) properties in the area, its entire market value is actually competitive.

I understand that to some people, investment is the biggest issue when they buy a property, but they shouldn't expect that same attitude of everyone else. My main concern is that DH and I can buy somewhere together so that we have the stability and safety of a permanent home before we start a family. And like I said earlier, if it does become impossible for us to sell up because of negative equity in a few years, it won't matter. We are looking for somewhere which will be adequate for as long as we need - and markets do recover! I don't mind waiting around if we have to. Plus (again, like I said earlier...) our income will be more than doubled in 2 or 3 years time, so there will be no difficulty borrowing a high LTV.

If everybody was too preoccupied with their property losing value then nobody would get anywhere - you could buy the "perfect home" in the "perfect market" and still have an incinerator build down the road, or have noisy hooligans move in next door, or any other unforseen situation which will massively devalue the house.

I appreciate that rental money pays for a roof over my head, but why would I choose to pay the landlord's mortgage rather than my own? At the end of it, they will own this house outright and I will have been paying for it. Why shouldn't I pay the same amount of money and actually end up owning a property out of it?

Great that you have the resolve to buy - but if you come to a forum for opinion - unfortunately you can not expect what answer you want - if so what is the purpose of the forum.

Good that you are convinced that 'your' house will not drop in value - conviction helps in decisions. But when you considers other opinion here - they are talking economics, where 'you' and 'your' home are both involved.

Firstly what you pay as rent - is the same as paying interest for your mortgage - and remember you pay a ton of interest in the first few years.

It is a little difficult to comment on your statement 'investment is the biggest issue when they buy a property, but they shouldn't expect that same attitude of everyone else' - probably you are too rich - or probably you are not heeding to the word 'careful'. If you are not rich - such that you can throw money away, then do consider again, if you can postpone your purchase. There is a looming recession, when the sellers will desperate (if they really want money).

Remember this - when you make the downpayment, you will not have cash with you anymore and your cash is with the seller - so in effect your cash is paying rent to your seller, who happens to have given you papers to own property. You are losing money (interest) and he is gaining money (interest accumulated).

Coming to a quote of price - start with any bold quote you want, subtract 30% of 185K. At most he will say no. If they come back with ANY number - may it be 180K also then it means they have NO offers YET and you are the ONLY hope as of now. So you know you have a handle. Good start.
Next you pile misery on them.
Tell them how good your credit score is (assuming you know it already).
Tell them how you have no chain - nothing to sell to pay for this house.
Tell them how your good score will SURELY get a loan - not like the others who are getting rejected.
Tell them you are member of 'prime' community and NOT 'sub-prime' community.
Tell them if they dont come down in price - to a future price of at least 25% drop, which is the average fall down in 2 years - you are in NO hurry to buy.
Finally tell them, I have CASH, you have a depreciating asset and huge market RISK. If I should take up the RISK, I want to be appropriately compensated.

Hope you will take the suggestion in the right attitude.

I have written the above in the assumption that your quest to buy a house is not a hoax. Hope you have not started this thread for fun.