Shared Ownership

HAMISH_MCTAVISH

myhouse wrote: »

Shared ownerships schemes are about to be banned in Scotland - you might expect that this is because it is artificially keeping prices high but seems it's more to do with builders lending money and not being properly regulated. .

They're not going to be banned.

It's a proposed technical change in lending regulations that would make builders either register as a lender with the FSA or provide the service through an existing registered lender.

myhouse_2

They're being banned in their present form. It remains to be seen if the builders will consider it more worthwhile to go through all the regulations. Perhaps (wishful thinking?) it might work out cheaper to just reduce the price of their houses. Probably no problem (though more expensive) for the big builders, but a much bigger issue for the smaller builders.

HAMISH_MCTAVISH

myhouse wrote: »

They're being banned in their present form.

No, they're not.

And to come on here and say that shared ownership is being banned is an outright lie.

There is a technical change that will require the builder to register as a lender, or provide the funding through an existing registered lender.

It remains to be seen if the builders will consider it more worthwhile to go through all the regulations. Perhaps (wishful thinking?) it might work out cheaper to just reduce the price of their houses.

Wishful thinking indeed.

It doesn't really matter if they reduce prices anyway, unless they reduce them to the point they're making a loss.

It won't help them sell meaningfully more houses to change a price from 150K to 140K. Buyers can't raise a 28K deposit any more easily than they can raise a 30K deposit. And if you reduce prices to 75K, then they are selling at a loss and will go out of business.

I'm sure you could sell houses for £100 all day long, but that's never going to happen unless the UK turns into a Detroit, with population shrinking by 50%, 40% unemployment, gangs ruling the streets, and entire suburbs being bulldozed into farmland.

You may wish for that. No sane person does though.

Probably no problem (though more expensive) for the big builders, but a much bigger issue for the smaller builders.

And the small builders will just club together to form an industry wide scheme with one of the lenders.

Problem solved.

brit1234

villa2010 wrote: »

I dont understand as I am sure that I have heard on the radio that some house prices in areas are increasing not by a lot - but still...!

Is this false...! have you got any good sources...?

Sources Land registry, Halifax and Nationwide. Ignore Rightmove they are asking prices for that month on new properties listed and don't include asking prices falls on existing prices.

Yes there are monthly fluctuations especially with the low transactions but the trend is down. Year on year figure are also negative.

myhouse_2

HAMISH_MCTAVISH wrote: »

No, they're not.

And to come on here and say that shared ownership is being banned is an outright lie.
There is a technical change that will require the builder to register as a lender, or provide the funding through an existing registered lender.

Wishful thinking indeed.
It doesn't really matter if they reduce prices anyway, unless they reduce them to the point they're making a loss.
It won't help them sell meaningfully more houses to change a price from 150K to 140K. Buyers can't raise a 28K deposit any more easily than they can raise a 30K deposit. And if you reduce prices to 75K, then they are selling at a loss and will go out of business.

And the small builders will just club together to form an industry wide scheme with one of the lenders.

Problem solved.

Calling it a lie is a bit harsh, though clearly there's more to the story.

Builders were happy to lend money on properties as it allowed them to sell the property at a good price. Banks, who are already lending the 75% may be reluctant to lend out the remaining 25%. Perhaps if it's fully underwritten by the builder, which I assume it will have to be, this won't be a problem. But if banks refuse to lend out the remaining 25% (e.g. on the basis that buyer is taking on more risk than they can afford), the market will collapse - no 2 ways about it.

I agree that reducing from 140k to 130k will not make a big difference - that's because the difference between what people would pay and what they now can pay is much greater. Sure builders will make a short term loss if they sell at 75k, but they need cash flow - sitting on an empty asset hoping for prices to rise again is not a business strategy. They need a certain amount of turnover to retain staff and buy new land.

It remains to be seen how big an impact this will have on the market, but I believe it doesn't come into force till next year anyway. Given that some builders are selling 60% in this way, I'll guarantee they're worried by this change.

geoffky

HAMISH is one of the over leveraged people who are in denial about the state of things to come...inflation has most of the time got rid of a lot of debt that people have held and in the past has been the friend of the over leveraged but not this time round as interest rates start the ascent back to reality..

frannyann

villa2010 wrote: »

Thanks folks for all your responses - your leg ends...!

I have heard they can be a nightmare to sell.

Our SO is a 2 bedroom newbuild located in tidy little village in the south west. Do you think this will be hard to sell in 3-4 years time?

I have had my SO for 8 years now, what it has given me is a secure home for my daughter which after the nightmare of renting and having landlords deciding to sell and chucking us out, end! Its also meant my 60% share bought at £47K is now worth £87K which has given me a nice deposit to move into full ownership. Selling is only a nightmare in that I have had to allow Moat sole selling rights for the first 8 weeks, this is up next week and they have not found a buyer, however estate agent is very confident of selling quickly once I can put that share on the open market as unlike the schemes run by developers, mine is run by HA which means my rent element is only £135 pm which makes my flat very attractive to first time buyers here, as the price of a one bed in this area is around £140K! Look at the long term is the best advice I can give.

p_joker

Me and My husband tried to go for one of these in South Molton sadly we didn't get the Mortgage, if your a couple with no kids then I think its ideal for you don't let anyone put a dampner on it. You can make it your own - decorate etc and maybe have pets. They seem to sell ok from what I've seen. The flat we looked at has gone already and one friend of the family had sold really quickly. I think if you can you need to save while your living there, I wouldn't recommend buying any more than the % you have already gone for (stair casing) because that would make it harder to sell in the future. Good luck and enjoy your new home

poppysarah

frannyann wrote: »

60% share bought at £47K is now worth £87K which has given me a nice deposit to move into full ownership.

But that also means every other house has increased in price too?

Running_Horse

Like I said. The usual suspects.