Budget 2011: First time buyers to get help buying new builds

Former_MSE_Helen

This is the discussion thread for the following MSE News Story:

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Budget 2011: First time buyers to get help buying new builds

regbrown

so very similar to homebuy direct? which as most smart folk know is a awful system to keep new homes at stupidly inflated prices. I went into a newbuild office and was told 2 prices, one for HBD and one for open market. as usual this is what happens when policy is formed purely on business interest, any first time buyer with experience would know these schemes are not good. you overpay for a house that is above real world pricing so when you come to sell your at a disadvantage.

plus we would just quite like new builds to just be priced reasonably. that's the experience in my area anyway.

CloudCuckooLand

What a great scheme - get a 75% mortgage and a 20% loan to buy 75% of a house...what could possible go wrong ?

There is a reason the banks do not offer 95% mortgages...

Muhasib

CCL - The scheme is shared equity, not shared ownership so the buyer will have legal title to 100% of the property.

regbrown - In my block, one 2009 Homebuy Direct property was sold again in Dec 2010 for £10k above its new price (as on Land Registry) so they don't all get sold for above 'real world pricing'.

Take a step back and realise we are funding the government 10% equity loan by a levy on banks to cover that % the bank won't lend to the purchaser, another case where the money just gets recycled in a different path to the same ends as before.

CloudCuckooLand

Indeed, you may get to "enjoy" 100% responsibility for maintenance and upkeep etc.

But if house prices rise over 5 years, will you get more than 75% of the increase in equity ? If you are sharing the equity, its not a flat £ amount loan. Its a %...

So developer and Govt benefit from your "own" 100% legally titled asset appreciating.

Muhasib

The devil is in the detail with the new scheme but with HBD you get the appreciation of your equity %. Of course you don't start paying interest on the rest for 5 years and may have the benefit of a lower interest rate on your own mortgage as you are borrowing less of the total transaction cost.

If house prices fall over 5 years then you would lose less than if you had 100% - this 'benefit' falls on the government and developer.

dimbo61

interesting that the interest will rise in year 7 by the RPI plus 1% rather than the CPI which the government now seem to be using to set pensions,benefits ETC

regbrown

if the housing developers admit they charge one price for HBD and another for non HBD then its obvious that they are inflating the prices on the schemes.

of all of the new builds I have seen, they are all far above the average price in the area. as one of the sales women (always seemed to be women!) said its like buying a new car, you pay for the privilege.

Senior_Paper_Monitor

Its certainly "just like buying a car" - worth considerably less as soon as you close the door and make yourself comfortable in your new possession !

Muhasib

regbrown wrote: »

if the housing developers admit they charge one price for HBD and another for non HBD then its obvious that they are inflating the prices on the schemes.

of all of the new builds I have seen, they are all far above the average price in the area. as one of the sales women (always seemed to be women!) said its like buying a new car, you pay for the privilege.

Or that they are pricing in the cost of providing a loan of 10% of the equity at 0% for 5 years and increasing at an indexed rate starting at 1% after that.

Gemmzie

regbrown wrote: »

if the housing developers admit they charge one price for HBD and another for non HBD then its obvious that they are inflating the prices on the schemes.

of all of the new builds I have seen, they are all far above the average price in the area. as one of the sales women (always seemed to be women!) said its like buying a new car, you pay for the privilege.

Locally, we don't seem to suffer from this problem, but then house prices are very high in comparison with other areas anyway.

I'm not sure about this scheme, the funding stream is a good idea but surely it would be better to put pressure on the banks to lend at a fairer level rather than complicating things further?

We are (hopefully) buying a shared equity property and the paperwork is far too complicated.