First-time buyers may be the losers in shared equity scheme

seriousDFW

This article is spot on. Yes there is a premium for new builds, but the pricing of these houses is extortionate. I cannot really understand the premium either, since I and most others I know regard new builds with derision not admiration. Given the choice of a Victorian terrace costing £125k in my area and a similarly sized newbuild costing £160k there really is no competition. The new build is 'nice' but we worry about quality - paper-thin walls, tiny gardens, inadequate parking, no space for dining table.

The shared equity schemes are a complete joke and I fail to see how they would benefit any buyer. The poster who mentioned the time bomb is spot on - can you imagine paying for a 70% mortgage at crippling monthly rates, while also trying to save to repay the 'equity loan' in 5, 10, 15 years? And you can't move to get a bigger house, because of the negative equity.

My partner and I have a combined income of £55k but after paying off debts we are only just now managing to save for a deposit. The government has offered us no viable help in buying a property, and these schemes are a slap in the face to people who work hard and just want to buy a home.

pioneer22 wrote: »

Who cares a home is to live in and all houses would of been new at some point... New homes will have a premium attached but houses will do whatever the market will do. Anyway if your smart you can add value to the house anyway and increase its value without relying on the market.

Happy to own my own house.

This comment is unfair. A home is indeed to live in and I would never want to 'climb the property ladder' for financial gains. However, I would like to buy a home that fits my whole family at some point. But say I bought a 2-bed property with a shared equity scheme, because that's all I could afford now, I'd be stuck in it as I wouldn't be able to 'climb the ladder'. So if I had more children I'd have nowhere for them to sleep. It's unrealistic in this country to expect FTBs to buy a 3- or 4-bed house that will in time be what they need to accommodate their families, so a certain amount of property-ladder-climbing seems necessary.

I can't see me buying anytime soon, I can't imagine not feeling like I'd been fleeced by someone - the government, builders, vendors or mortgage companies. Will have to continue to suffer looks of pity when I 'admit' that I'm still renting.

SecondLegDownIsTheBigOne

pioneer22 wrote: »

Happy to own my own house.

Congratulations on being mortgage free.

You are mortgage free? Aren't you?

poppysarah

http://www.housepricecrash.co.uk/forum/index.php?showtopic=173441&view=findpost&p=3217868

Law Society warning over government's new shared equity scheme
http://www.lawsociety.org.uk/newsandevents/pressreleases/view=newsarticle.law?NEWSID=414077

Wednesday 03 September 2008


And other warnings since

nearlynew

piggeh wrote: »

Anyone buying a new property - shared equity, outright, first time buyers, or 3rd time buyers - will all see negative equity the moment they buy a new build.....

Incorrect.

You don't get into negative equity just because the value of a house drops.

Graham_Devon

Surprised it needed a repor tto be honest. The way the scheme was set out it was blindingly obvious.

And love how a "Director of Economic Affairs" can come up with this corker....He even states others lack depth and understanding!!! Check out the second paragraph!!!

The Home Builders Federation contested the IPPR's claims. John Stewart, director of economic affairs for the group, said: "While agreeing we have an acute housing shortage, the report lacks either depth or an understanding about residential development in the real world and should be ignored.


"If home builders do not have customers with mortgages, simply building more homes would do nothing to meet demand, but it would result in a massive and financially damaging build-up of unsold stock. I don't see how the schemes help to inflate prices, as these properties still have to go through the same valuation process as all other properties."

grizzly1911

seriousDFW wrote: »

This article is spot on. Yes there is a premium for new builds, but the pricing of these houses is extortionate. I cannot really understand the premium either, since I and most others I know regard new builds with derision not admiration. Given the choice of a Victorian terrace costing £125k in my area and a similarly sized newbuild costing £160k there really is no competition. The new build is 'nice' but we worry about quality - paper-thin walls, tiny gardens, inadequate parking, no space for dining table.

.

Similar figures by us , perhaps a bit lower in each case.

Yes you do get "new" items installed but these could piecemeal as funds allow to a quality to suit rather than basic.

Never could see the benefit to the individual.

A friends child and partner have taken one on but will be interesting to see how it pans out.

wymondham

Spot on reports here, especially saying the Govt needs to leave the meddling alone and the situation will sort itself out. For far too long they have been propping up prices and allowing builders to flog inflated priced flats/houses to those who will do pretty much anything to get one.

If they are going down this route then can I suggest that Govt subsidise iPads as I find them expensive and I have a right to have one? Yes, it is silly to suggest, but not as silly as they have done housing wise and car scrappage etc etc etc.....

pioneer22

SecondLegDownIsTheBigOne wrote: »

Congratulations on being mortgage free.

You are mortgage free? Aren't you?

Just 3 years from buying hopefully as we both earn good wages. We bought big enough for children.

pioneer22

We have bought a house right near the city centre where 2 bedroom apartments which arent new btw and not just one building but a whole load are selling from 100k upwards.

cotleigh

To me, all of these schemes are loud-and-clear signals that house prices are too high.

When I first heard about them a few years ago, I just knew that they would generally be a pretty rubbish deal for most people.

They are like these rip-off "rent to buy" schemes for home appliances, where people who can't get normal credit end up paying £1000 + for a £300 fridge-freezer, that have been criticised in the news in the last couple of days, except on a far bigger scale!

I've had a couple of people I know mention that they were "thinking about" going in for some "shared equity" deal, and I told them why it was likely to be an awful deal.

Before the credit crunch, when it must have seemed to a lot of people that prices were going to carry on going up for ever, you could see how these schemes appealed to people who despaired of ever being able to buy "their own place".

But the bigger picture is that when they have to come up with financial jiggery-pokery like shared equity, interest only loans, 40 year mortgages, government-backed loans for deposits, or whatever, in order for anyone to afford a little flat, then its time to steer clear, and wait til the market corrects itself.