Shared ownership/equity is a scam.

scooby75

Ive seen a small 3 bed detached property for less than £140,000. I think it's well worth the price and I would have gone for it except I don't earn enough.

Idiophreak

Ulfar wrote: »

So you agree that new builds and shared ownership properties when first sold are "more expensive" even if you don't accept that means overpriced it does however mean the sales off these properties are skewing an areas house prices by making average sold prices higher thereby helping to keep prices higher.

The fact they are higher initially is a downside that people should be considering which goes back to the argument that shared ownership is a bad deal. When those people come to sell they then realise all pitfalls.

Houses being more expensive doesn't "skew" the average house price, though...it changes it. So there's a massive difference between "overpriced" and "expensive" in that sense.

Also, average house prices don't really effect "house prices" as directly as you seem to think. So you've got 4 houses, all worth 200k. Then someone adds a 6th house, exactly the same, but brand new...It sells for 220k. Average sale price goes up 4k....but, actually, if you were to buy one of those homes, availability's just increased, so you're unlikely to even pay the 200k for it, let along 204.

So I really don't see the argument on a market-wide impact...but I've no issues with the personal impact of shared ownership:
a) a lot of people just don't realise that they pay a premium for new builds...and so are shocked to land in negative equity as soon as they buy one.
b) *most* shared ownership properties (not new builds in general) are overpriced - not just expensive. The scheme is used to trap people into paying the high asking price and this just makes the negative equity situation so much worse. Lenders don't do enough to downvalue and help purchasers pay realistic prices.

Ulfar wrote: »

Then in my opinion that makes them daft, I would rather have a larger house for the same price, the fact it may be older is also a boon as when viewing you can see how the property has stood the test of time. I would never buy a property built within the last 10 years.

I think you misunderstood. My point was that, when valuing a flat, surveyor's don't go "well, a shared ownership property sold next door for 120k, so that's a fair value". They're not idiots, they know that people overpay for shared ownership properties, so they ignore them. That way, shared ownership properties, once again, have negligible impact on an area's house prices.

Ulfar wrote: »

Its not just about price that makes a property hard to sell. With a shared ownership property as a seller you can't upon deciding to sell just pop down to an estate agent and put it on the open market, there are complications and costs imposed by the housing association. In addition as a buyer the range of mortgage providers and products you can use is also limited.

Ultimately, all of this stuff just leads to a lower sale price, though. If it was just a hassle, it wouldn't be such a big deal...but it's the fact that people (can) lose money hand over fist on resale that's one of the big issues I have with shared ownership...Buy high, sell low. Never great business.

heathcote123 wrote: »

So presumably in your first statement you actually were referring to people that were attempting to buy 100% of a property on shared ownership?!?
.... Had my wages not gone up (which was always unlikely) I would still be building equity. [/I]

Sorry, yes. Call me old fashioned, but when I think of buying a house, I think about buying a *whole* house.

If your wages hadn't have risen, you'd have (eventually) been gathering equity, yes...but to what end? To own half a house in 25, 30, 35 years...then what's the plan? Try and find another lender that will give you a mortgage for the other half before you retire / die? Good luck with that.

Of course, in those 25 years' time, you'd have half a house...which is better than nothing, I guess...but, as I said before...you wouldn't be "on the ladder" - you'd just be a person who owned half a house. Your only mechanism for getting "on the ladder" would be to downsize or move to a much cheaper part of the country where you could have afforded to buy without shared ownership in the first place.

You kinda need to stop with the personal insults, too. It's neither necessary nor in the spirit of the board.

richardw

Idiophreak wrote: »

....Lenders don't do enough to downvalue and help purchasers pay realistic prices...

Why don't Lenders do that then?

Idiophreak

richardw wrote: »

Why don't Lenders do that then?

Good question - anyone got any ideas?

brit1234

The_J wrote: »

Shared ownership and equity can work for some people in some situations if they can get a good deal. Like anything, if you pay more for something it's not a good deal.

Oh and brit, bad news, Halifax house prices up 2.2% in March. Update your sig,

I am a Crazy Person

You should note that this site doesn't check my status as a Crazy Person, so you need to take my word for it. This signature is here as I follow MSE's Crazy Person Code of Conduct. Any posts on here are for craziness and ranting purposes only and shouldn't be seen as sensible advice.

The J (Crazy Person)
If you read my posts over the last few months I have been openly talking about predicting price rises last month, this month and next month. I believe next month Nationwide and Land Redistry will be up. However the size of price rise on Halifax this month I now predict the price will be down. This is because based on Halifax past figures when there is a huge jump up or down there is an opposite result the next month countering. This happens based on low transactions distorting the trends.

The reason I have been talking about rises these months was the rush to beat the stamp duty deadline by first time buyers. I stated that first time buyers would be held hostage to complete before the deadline and actually pay more than they would of saved on the stamp duty especially as sellers always ramp up asking prices at this time of year which again had been shown in Rightmoves figures. I have openly recommended that first time buyers wait to after the stamp duty deadline as they would save more money. This has been backed up by the Independent article released today.

First-time buyers push house prices up
First-time buyers rushing to jump on the property ladder before the end of a stamp duty holiday helped house prices jump 2.2% in March, the Halifax revealed today.

http://www.independent.co.uk/news/uk/home-news/firsttime-buyers-push-house-prices-up-7618128.html

The other effect I predicted for the last year was the closure of stamp duty avoidance. This too has happened and will result in big national price falls as of this May onwards. Strangely the Daily Mail has also predicted big property price fall today.

Take cover! The housing market is heading for a bloody and protracted crash
But you may not have noticed the strength of the property market, because years of implausibly high prices have blunted your reflexes. The sad fact, however, is that that market is every bit as warped as the other two. And when a market has lost touch with reality, reality has a nasty habit of biting back. That doesn’t just mean a return to long-run sustainable levels. It means a dip below those levels, before a sustainable level can be found.

That dip will be protracted, bloody – and furiously resisted by the banks who will demand further bailouts to protect their business models. (Read: protect their bonuses.) When Hometrack comments that the market isn’t ‘firing on all cylinders’, the best response is a cynical laugh. The market will fire again, when prices are sane. For now, stand well back and take cover.

Read more: http://www.dailymail.co.uk/debate/article-2124941/UK-house-prices-Market-heading-crash.html#ixzz1rAIvX7B3

So let's see who is right.

Shared ownership, shared equity and now Newbuy are designed to keep house prices high for the builders to hide them from actually being bankrupt, they do not benefit the buyers. As a key worker I have to many friends who have fallen foul of these schemes and I will continue to talk out against them. I have no issue with schemes that are generally are designed to help first time buyers but I am yet to see one. These scams are wolves in sheep's clothings.

I update my signature at the end of the week once all figures are out even if some are up or down.

brit1234

richardw wrote: »

Why don't Lenders do that then?

A lot do, you just have to see the posts on MSE where members walk away as the lenders won't give what the builder wants.

The way the builders get round this is they have their own favourable mortgage advisor's and solicitors. Once they manage to get one through they register it on the land registry and try to set it as a benchmark for valuing all other properties in the development. It is for this reason the number of mortgage products for such schemes are very low. I think any mortgage advisor here will back that up. You will see that oftern the builders are insistent on you using their mortgage advisor and solicitor. which is wrong and bordering on corrupt. If there wasn't an issue you would be able to go to any lender or solicitor and get it sorted.

Idiophreak

brit1234 wrote: »

A lot do, you just have to see the posts on MSE where members walk away as the lenders won't give what the builder wants.

I've seen this quite a lot for shared equity, but can't recall it very much for shared ownership...have you seen both?

brit1234

Idiophreak wrote: »

I've seen this quite a lot for shared equity, but can't recall it very much for shared ownership...have you seen both?

I have seen some for shared ownership but I think you are right that a lot more appear to be for shared equity. It could be as I said earlier that funding for shared ownership is fast drying up whilst many builders continue their own shared equity schemes despite the government abandoning its shared equity schemes.

richardw

brit1234 wrote: »

...The way the builders get round this is they have their own favourable mortgage advisor's and solicitors. Once they manage to get one through...

So how do they get it through the lender's valuer then?

richardw

.........bump..............