Government FirstBuy Scheme - what where and how!

Muhasib

well with the budget adjusting the level of stamp duty levied for investors buying portfolios that Glasgow portfolio will be a lot cheaper in transaction costs than it was last week.

SG27

THE_GHOUL_FRENZY wrote: »

Shared ownership and Shared Equity schemes really are excellent and vital in helping people take that crucial step onto the 1st rung of the housing ladder. I'd highly recommend them.

I looked in to shared ownership a couple of years ago. The problem I found with it was the 'staircasing' that was the idea behind it. So as your income improved and you saved up a bit you could then buy up another share over time. The sales agent I spoke to said as our incomes increase we could staircase until we owned the whole flat. But with paying the mortgage and the rent there would not be much left over to save for buying up the next share and the other problem is I don't expect our wages will rise all that much unless we have a drastic career changes! So the idea of a getting on the ladder with shared ownership is pretty non existent!!

I think the best option is just to save a decent deposit and buy like normal, at least you can then sell and move up the ladder. shared ownership seems like a trap from what I saw. We've saved a good deposit now so hopefully towards the end if this year/ early next we will be buying the whole of our house :j

Shinkansen

I only came on here to offer some advice to people who wished not to be bashed over the head with the same old opinions. Just giving my two cents, which is a different point of view, sorry if you don't like it.

I said inflation will always prevail into the long-term, there will always be short-term fluctuations in prices... of course. I recommend you look up what "long-term" actually means to an economist. Also, look at the economic system that we have built our economies on.... fractional reserve banking, compound interest and debt-based currencies ensures that inflation is ALWAYS prevalent in the long-term if an economy is to grow. If growth isn't continuously encouraged, it will collapse. (As we are partly seeing now, and the scrabbling around to try and prop it up)

I'd like to repeat I am considering the part-buy/part-rent scheme, not the equity loan.

I don't have 9 years spare to save a deposit nor do I wish to rent. That would be my personal choice and the reason for such a scheme existing.

"Bubbles" are short term phenomena perpetuated mainly by speculation and investors. This still does not effect long-term trends. Please just look at real house prices in the UK since the 50's for evidence.

I won't respond to some of the childish comments aimed at me on here. I am quite comfortable in my profession and beliefs. The fact that people have to resort to such talk, and not address the points I have made about the scheme itself (the point of my original post) really does speak volumes.

Bargin_bunny_2

agabus25 wrote: »

When entering these schemes a buyer is at a high risk of stepping into negative equity on day one. Consider buying a new build flat for £100,000. In a shared equity scheme you pay the full asking price but a deposit holding buyer, cash buyer or investor will not pay the asking price, they will pay what Rightmove tell us is the average discount to the asking price of 7-8%. So, you pay £100,000 and your neighbours are likely to have paid £92,500. You have £5,000 of your own equity in the flat but the open market price is already £7,500 below what you paid, so you have virtually guaranteed 2.5% negative equity the second you sign the documents. So you need an 8.1% increase in the value of the house just to restore your original equity position of £5,000. That's no criticism of the scheme or comment/prediction on the market just how the mechanism operates in shared equity and anyone buying this way needs to be aware. You are unlikely to emerge with any equity unless prices rise quite materially.

Maybe I'm missing the point but arnt people who already bought houses previously already in negative equity? Surley there must be a dependent factor of where you live. For example I live in the west midlands this is a quote from newspaper last year

House prices in the West Midlands have tumbled by more than a tenth in three years as the cost of renting soars, figures revealed today.


so assuming I buy with the scheme wont I just be in the same boat as others and as the market rises this should be resolved

Bargin_bunny_2

Just thought i'd add I was talking about goverment scheme.

Also temporary negative equity vs no equity at all and inflated rental prices. Which is really worse?

poppysarah

http://www.guardian.co.uk/business/2011/mar/27/firstbuy-scheme-fears-falling-property-market

pararct

RedTulip wrote: »

I agree macadamia. My partner and I will be buying our first house soon but it will be my grandparents old house (bit complicated, but that's another story)

I don't want a shoebox, I want the lovely 1930's semi of which I have fond memories groing up. We won't get any benefit from this new scheme, why don't they just try and help all first time buyers... or none at all?

They do it in the interests of political expediency, better to be seen to do something rather than nothing at all. The added benefit in this case is the Government knows the vast majority of people do not understand these schemes and that it's prime objective is to suck people in to buy overpriced shoebox property.

Avoid shared ownership like the plague.

Best thing any first time buyer can do is continue to save hard looking for the best low risk investment returns they can get. Interest rates are starting to edge up for savers now with some BS offering very close to 4% for two year fixes.

Sit tight for now your time is coming......

zebbedee

leon501 wrote: »

I agree with the people asking for more advice and not just negative comments

I for one am very intersted in this scheme, I have saved up around 7k towards a deposit on a house but it could take me up to 2 more years to save up the rest for a 20 percent deposit on a house

I have a good job and am reasonably well paid as well, alli want to do is by a normal house that i can raise a family in with my wife, not buy a mansion or anything i will struggle to pay off.

Currently i pay around 600 pounds a month in rent so if i were to get on this scheme then i could put that into paying off a mortgage, over the next two years that would be over 12k paid off my mortgage or at least the interest.

Maybe this deal does have some flaws such as having to buy a new build but whats the alternative, you all keep harping on about house prices coming down but the trouble their is two things, 1 people can't afford to sell them for less than what they bought them for as they all went mad and bought houses they could never afford and 2 the goverment has made it so banks will not reposess these houses so even when mortgages do start to move again these houses will continue to just go up and up

If people do have any help then please just post it maybe some of us have looked into this deal and will continue to look into it because it is best for us!!!

With the governments attempts at proping up the market having delayed the inevitable for some time the day draws nearer when the international markets will usurp the BoE and rates will rise regardless. The knock on effect on those struggling with the mortgage already will be to compound the oversupply of houses for sale. At that point the collapse will begin and the government and BoE will not be in a position to continue to support prices. Your current 20% will be a darn sight more by then in real terms. And the normal house will be a house you can live in for a very long time, not a cramped shoe box with no room for a family. The alternative is to stop thinking like the powers that be want you to and wait a short time tobe able to afford a much bigger house from some distressed seller. You've even said it yourself, the thing that will weigh on the market during the final collapse are those who could never afford to buy in the first place.

The market is not made by those who will only sell at a price they need but by those who will sell at a price they can get. If you don't sell you are not in the market at all.

HAMISH_MCTAVISH

Just ignore all the doom-mongers on this thread, it's been linked to from a rather nasty fringe extremist website where they wish for a double dip recession to trigger falling house prices, and cheer on things like unemployment and repossessions to achieve their aim.

The homebuy schemes can be found here....

http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/HomeBuyingSchemes/DG_073696

I'd imagine the agents for those will know about the new one.

This is an excellent scheme for FTB-s, by the way.

A recent poll of renters found that around three quarters of those who wanted to buy listed the absurdly large deposit size now required by the profiteering banks as the biggest barrier to homeownership.

And house prices today are barely above the long term average (4.5 times full time male (mean) salary today versus the average of 4.0 times male (mean) full time salary. Source: Halifax ) whilst prices are also below the long term tred in real terms, and average mortgage payments of 29% of disposable income are also well below the long term average of 37% of disposable income, never mind the peak of 68% of disposable income in 1990. So todays buyers can certainly afford todays prices.....

Price is simply not the problem. It's mortgage rationing that's the problem.

This scheme will allow FTB-s to have the use of a 20% deposit interest free for 5 years, which is an excellent deal.

As to what will happen with prices, it's very clear that after the next year or two of stagnation, prices will be soaring again in pretty short order. SO getting on the ladder as soon as possible is vital for FTB-s.

Those who claim prices will crash again are wrong, mostly vested interests desperately trying to dissuade enough people from buying so as to make their prophecy come true. Immensely irresponsible of them, but there you go.

To see what will actually happen to prices, you don't need to look much further than Iain Cowies piece in the Telegraph this week.

https://forums.moneysavingexpert.com/discussion/3135998

Now granted, Cowie is pretty much against HPI of any sort, and a bit of a radical, but even he gets it now. Mortgage restrictions can't prevent HPI, they can only delay it. Read the article. Very informative as to the big picture.

The shortage of housing in this country is now reaching crisis point, and those who don't buy in the next year or two will find themselves fighting a remarkable set of circumstances.

We are adding 400,000 people a year. We add 250,000 new households a year. But we build just over 100,000 new houses. The lowest level of housebuilding since 1923 last year, and new housing starts are down 41% year on year since then.

This is why UK prices hardly crashed at all, and bounced back so quickly after the crash. Other countries had ZIRP, liquidity schemes, help for homeowners, etc. But UK prices performed so well because we have a massive and worsening shortage, and their prices plummeted so far, 45% and falling in Ireland for example, because they have a massive surplus.

Empty house vacancy rate:

Ireland 17%

USA 11%

UK 3%

You don't need to look any further than that stat to see why our crash ended and the recovery is underway. It's all about supply and demand.

And talking of supply and demand, the biggest generational surge in UK history is about to reach FTB age starting from 2012 and lasting until 2025, a surge of people bigger than the boomer generation. That by the way is why rents are now soaring, reached a new peak last year (dipped slightly in Dec/Jan as expected) but now back on the rise again. Rent payments are now more expensive than mortgage payments in 80% of the UK.

So good luck with the new scheme, and I'd book your place quickly if I were you, there's a huge and building pent up demand out there, and houses are only going to get harder to buy in the future.

HAMISH_MCTAVISH

brit1234 wrote: »

. I love Property Bee.

So do I.

But it should come with a financial health warning for stupid people.

Property bee will almost always show mainly reductions in asking prices, even in boom times increases in asking prices are vanishingly rare.

But it tells you not a thing about what actual selling prices are doing. If you relied on property bee for your data, you'd have thought prices were plummeting from 2000 all the way until today. When actually they've doubled.

Only an idiot relies on property bee to tell them whether a crash is happening. The rest of us look at actual sold prices, and know full well a crash isn't happening.