Taylor Wimpy - Advice needed

mac456

Hi all,

We have just been to look at a new build house by Taylor Wimpey.
They are currently offering a scheme on them call "low cost".
You buy the house at 75% of the market value but you own the house 100%.
Does anyone know anything about this scheme and is there anything to worry about?

Link below explains the scheme on their website

http://www.taylorwimpey.co.uk/newhomes/midlands/swallowsnest/lowcost-york/

it also mentions this

"the 75% price applies in perpetuity ie when each of the Low Cost homes is sold it will always be at 75% of the market value (as determined by two independent surveyors)."

So does that mean when ever someone wants to buy it they have to buy it at 75% of the market value again?
what happens to the other 25%?

Thanks

Mac

DVardysShadow

mac456 wrote: »

So does that mean when ever someone wants to buy it they have to buy it at 75% of the market value again?
what happens to the other 25%?

Backhanders and side deals.

inmypocketnottheirs

Wouldn't touch with a barge pole. Over priced and a sure ire way of losing some money.

mynameistallulah

Large property developments have to offer a certain amount of low cost housing, and this is what is being advertised here.

mac456 wrote: »

"the 75% price applies in perpetuity ie when each of the Low Cost homes is sold it will always be at 75% of the market value (as determined by two independent surveyors)."

So does that mean when ever someone wants to buy it they have to buy it at 75% of the market value again?
what happens to the other 25%?

Yes, that is correct, the house will always be sold on at 75% of its full value, it will always be a "low cost" home. The 25% doesn't really exist, no one ever receives (or pays) that value.

You would need to check what other costs were involved - for instance, it is possible (likely) that you will have to pay for the two valuations. Also, it may be that you will only be allowed to sell for a fixed value, you will not be able to negotiate. This should not be a reason not to buy, as long as you go into it with your eyes open.

mac456

Thanks for the replies. Thats a great help.

So from my understanding the main issue with these houses will be when coming to sell it (people being interested in buying into the scheme?)

Also when you say a fixed price, do you mean that they (Taylor Wimpey) will sell the property for me for what price they agree on?

MagicCats

Basically it appears to work like this:

Taylor Wimpey build 100 houses of which for example 10% of which are allocated as 'low cost' So whilst the 90 'normal' houses retail at £200k the low cost units sell for £150k.

You buy at £150k and if in the future you wish to sell you must market the property at 25% below market value. For example if the area goes up and the 90 normal houses are now valued at £225k you can only market at £168k.

If sold at that price you'd make £16800 on the original purchase price of £150k. It would work in reverse if values fell. Ultimately it doesn't seem a bad scheme as such. My concern would be buying a new build because regardless of whether you buy at 100% or 75% you will be paying over the odds anyway. Just look at the way new builds have devalued in your area.

As others have said in reality the 25% doesn't exist as such. They've basically just priced the house 25% cheaper. The only catch is you have to do the same when you sell.

sirmosh

When you factor in the premium you pay for a new build you're instantly going to be in a bad position. Say similar houses second hand are worth 200k but because yours is brand new you pay £220k, with your 75% you're now paying about £172.5k but the second it's not brand new it's only worth £200k so now you'd have to sell it for £150k.

Not too bad if you stay there 10 years and prices go up a bit, but if prices don't go up for years then you'll be sitting on a loss for a long time.

Surveyors know that being brand new means there is a premium attached so when they value it the will probably value it a bit higher than an equivalent second hand property.

leeelw

this is known as fixed equity which is a modern day shared ownership, only against the shared ownership you do not have to pay rent on the remaining share.

it is a builders obligation when building a new site to offer a percentage of 'affordable housing'

it is a really good scheme because it does exactly that, you buy a house at 200k for 150k

and some lenders will allow you to off set some of the "25%" to bulk your deposit and get you a cheaper rate, you'd have to speak to a good broker on that one.

one fellow pointed out that you would not set to make a great deal if house prices went up, which is correct, however, again, thats the point of the scheme, for the lifetime of this property it should remain 'affordable' when it goes back & forth on the market.

it is worth knowing who owns the remaining 25% ? in some contracts they will stipulate that after 10 years the property as soon as it goes onto the market will have to be sold at 100% and the split will be made on the full sale 75% of the value to you and 25% to the "holder"

this doesn't pose a problem and i think it also allows you to own 100% fully at the going market value.

highly recommended for getting on the ladder, BUT, if you can afford 100% that is always preferred.

again new build prices are hyped up, but they do allow you to factor in these hidden fee's which is convinient for not stumping up money at the time, you can ask them to remove all incentives and bid at the "unit price" - unfortunately nothing is free and within the price you do end up paying for these so called incentives

hope this helps

MagicCats

leeelw wrote: »

this is known as fixed equity which is a modern day shared ownership, only against the shared ownership you do not have to pay rent on the remaining share.

it is a builders obligation when building a new site to offer a percentage of 'affordable housing'

it is a really good scheme because it does exactly that, you buy a house at 200k for 150k

and some lenders will allow you to off set some of the "25%" to bulk your deposit and get you a cheaper rate, you'd have to speak to a good broker on that one.

one fellow pointed out that you would not set to make a great deal if house prices went up, which is correct, however, again, thats the point of the scheme, for the lifetime of this property it should remain 'affordable' when it goes back & forth on the market.

it is worth knowing who owns the remaining 25% ? in some contracts they will stipulate that after 10 years the property as soon as it goes onto the market will have to be sold at 100% and the split will be made on the full sale 75% of the value to you and 25% to the "holder"

this doesn't pose a problem and i think it also allows you to own 100% fully at the going market value.

highly recommended for getting on the ladder, BUT, if you can afford 100% that is always preferred.

again new build prices are hyped up, but they do allow you to factor in these hidden fee's which is convinient for not stumping up money at the time, you can ask them to remove all incentives and bid at the "unit price" - unfortunately nothing is free and within the price you do end up paying for these so called incentives

hope this helps

Not meaning to be argumentative but I don't think anyone owns the 25%. I also doubt a lender will allow a bulk up of deposit using the offset from the 25% because it doesn't exist, and at no point will the owner be able to 'access' it. Essentially it would be a false LTV.

To me it reads like a fixed discount that runs with the life of the house that stipulates it must always be sold at 25% below market value.

namecheck

OP - I agree with inmypocketnottheirs.

Do some research on Taylor Wimpey, on this forum for instance. And make sure you are fully prepared for the drawbacks of the fixed equity scheme, if you do decide to go ahead.

I can see the attraction, if you want to "get on the ladder", but this is why these schemes are dreamed up - to trap the desperate and unwary.

C_Mababejive

Dont touch it. Many of these schemes are created to simply shore up unrealistic property prices and in any case,many new builds,whilst they may look cosmetically good..are simply shoddy cardboard quick build boxes which cant stand the test of time.