Artificial prices.

Thrugelmir

martynh99 wrote: »

so have you figured out yet why we moved out of the area only kidding.
We had an experience with having a kitchen fitted that ended up in small claims court (we won). Also had lots of snags on new build kitchen aswell which is why I feel able to make my statement.

My comment was of course in jest.

baileysbattlebus

martynh99 wrote: »

Not sure, I would have thought it was bordering on fraud on the buyers part *if* my assumption is right about getting round the deposit requirement for the mortgage.

When we bought a new build we were given a £10000 discount for quick completion, we were also the first ones on there.

Gifted deposits aren't illegal as long as they are disclosed.

The use of discounts and incentives is not illegal but can be used by fraudsters as a means of getting inflated loans from a lender. The Council of Mortgage Lenders introduced a new requirement that conveyancers must now disclose to lenders when a discount or incentive is used. And, as a result, Land Registry changed its practice on entering the price paid in the register where a transfer reveals a discount or incentive. Currently the net (lower) price is entered.

http://www1.landregistry.gov.uk/assets/library/documents/Landnet_18.pdf

it's on page 6.

carolt

But if it was disclosed, theycouldn't borrow against it as part of the deposit, as the OP was claiming - as presumably the mortgage co would alter their lending and rates accordingly. So they'd be no better off than with just a lower offer.

So presumably he's suggesting they did it illegally ie didn't disclose it, or there'd be no point.

Is this common? Anyone know?

kennyboy66_2

martynh99 wrote: »

Yes i'm feeling bitter because I didn't get my offer accepted on this property but what the EA told me really annoys me.

House on market for £199950
They accepted an offer of £199950 with the vendor paying £6500 towards their deposit.

My guess is the buyer didn't have enough deposit if they bought at £193450 as on an 80% ltv they would need deposit of £38690.

By getting a mortgage on £199950 they would need £39990 deposit but when you take off the £6500 the vendor is 'giving' they only need £33490 .

What this does to the market is the LR will be shown as £199950, all the monthly price indexes will artificially show that sold prices are on the up and people are obtaining mortgages they can't afford - one of the contributors to the economic crisis we're in today.

Sounds like a load of bollicks to me.

Would you ever believe an estate agent ?

chucknorris

carolt wrote: »

But if it was disclosed, theycouldn't borrow against it as part of the deposit, as the OP was claiming - as presumably the mortgage co would alter their lending and rates accordingly. So they'd be no better off than with just a lower offer.

So presumably he's suggesting they did it illegally ie didn't disclose it, or there'd be no point.

Is this common? Anyone know?

I think it's quite common in fact Kenny and I were thinking of gifting you with a deposit but Kenny thought that you might grass on us so we decided not to.

System

Although it's a good story, to answer the original question, I very much doubt that this is happening often enough to make a noticable impact on the indices.

Thrugelmir

Joeskeppi wrote: »

Although it's a good story, to answer the original question, I very much doubt that this is happening often enough to make a noticable impact on the indices.

With such low levels of activity. Anything will impact the indices at the moment!

Cannon_Fodder

When Panorama covered the Morris property fraud, founded on Gifted Deposits;
http://news.bbc.co.uk/1/hi/programmes/panorama/7217731.stm

"The Solicitors Regulation Authority told Panorama it is currently investigating 60 firms of solicitors across the country over allegations of over-valuing and mortgage fraud."

4 examples in one article;
http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article3409571.ece

Important enough to be included in Solicitors Regulation "warning" advice;
http://www.sra.org.uk/solicitors/code-of-conduct/warning/1816.article

...5 minutes googling, there's bound to be more examples.

...dozens of gifted deposits advertised on http://homes.trovit.co.uk/index.php/cod.search_homes/type.1/what_d.gifted%20deposit/

...seems to be the only way some properties are shifting.

martynh99

Thrugelmir wrote: »

Lets see when the figures are published what it sold for. My instinct says not. You seem to be assuming a lot.

LR Details are out - Sold for £199,950

HAMISH_MCTAVISH

Thrugelmir wrote: »

With such low levels of activity. Anything will impact the indices at the moment!

90,000 houses per month is high enough that a few deals like this would have no impact.