MSE News: High mortgage rates hit Government new home scheme

regbrown

We looked into these a couple of years ago. All I can say is do not touch these with a barge pole. We were offered one price for the house under the scheme and another if we were happy to fund normally.

So these new homes are utter negative equity traps. I still keep an eye on the houses and many have come up for resale, so far they have had to drop about 15% off the original price to have a chance of selling,from my monitoring.

My partner originally lived in a flat literally 200m from a plot of flats just built. Her old rented apt was going for about 80k, these new build flats are asking 180k.

Such a rip off and they target the vulnerable desperate to get out of renting. 2 years ago I questioned the sales lady about the price and she assured me that house prices would only be going up so I would make a nice profit....

Thank god we saw sense and just stuck at saving hard to get a place on the normal market.

Fire_Fox

Perhaps negative equity and repossessions are necessary to bring the market back down to earth and stop people banging on about the property ladder. It's not exactly long since there was a crash back in the late eighties, yet for years before this recession hit people still bought houses with little to no deposit that they could only ever stay in for a few years.

IMO we need affordable RENTED housing to be built or available, not to encourage yet more people who are incapable of saving up a decent deposit to get themselves tens of thousands of pounds of debt. We shouldn't need this pot of money nor government guarantee it should be the norm to have three months mortgage payments/ insurance/ service charges saved up, in case of change in circumstances. In London particularly there needs to be government recognition that this pot may take the homeowner over the savings threshold for benefits.

Lizling

In my borough, there are 2 new developments with properties that would be eligible for NewBuy. 1 of them is in a area where I've already been looking at flats so I know the market. The going rate for a small 1-bed there is about £160k. The new builds start at £215k and unlike the older ones, they don't even have kitchens.

How on earth can it surprise anyone if FTBs are reluctant to pay an extra £50k to get the new builds?

Edit: Thought I'd put some links in to prove it, in case anyone thinks I'm exaggerating.
Here's the new build: http://www.rightmove.co.uk/new-homes-for-sale/property-20338731.html?premiumA=true
And here's the older one: http://www.rightmove.co.uk/property-for-sale/property-37947539.html?premiumA=true

seriousDFW

I agree that the prices of these new builds are the problem. I've seen some really nice new-build houses but the ones which are adequate for a reasonable family life are simply out of reach. Even the cheapest new-builds are more expensive than comparable second-hand homes.

What irks me more than anything, is that developers think they can rip people off with substandard product at premium prices. So many houses I've seen have no proper dining area, which would only serve to erode quality family life, and I can't believe how much terraced housing they are building. I couldn't ever buy this because I don't trust the quality of the build, whereas this isn't as big a dilemma in an older property.

However, I firmly believe the problem lies with the consumers who are actually agreeing to pay the ridiculous prices for the new builds. If people didn't, they would have to fall in line with their true value, as indicated by re-sale values and comparable non-new property. The prospect of immediate negative equity scares me from buying a new-build more than anything, and this scheme, as noted by others, offers no help for the buyer, it just offers protection for the banks.

Mobeer

I wonder with this scheme if there is something deeply self-defeating. As I understand it, the government wants to support buyers who otherwise could not afford the new property without help. They are therefore higher risk borrowers than the people who could afford the new property without help. As they are higher risk then the interest rates are higher, which doesn't help.

diamonds

Perhaps say we all live in reality & realise property prices are codswallop. Housing association costs that are meant to traditionally cheap rent like local authority are expensive as local authorities are charging them loads for land purchase.

I mean how hard is it to sell old neglected local authority housing (that local authorities wont renovate to any great standard) at a reasonable affordable cost & invest that money raised in a new national public works merged homebuilder & repair service that takes on apprentices for all professional employee's and builds cheap affordable BRICK homes for rent & buying on OUR local authority owned land.


Oh look youth unemployment is down, the market is moving, newer local authority homes nationwide are built.....on & on & on....

What do we pay these IDIOT MP's & civil servants & professionals for ? Oh yeah thats right to divert our money to private for profit companies !!

Lets get Britain moving ? Lets sack you lot !!!

Pincher

There is a process called snagging, where a finished building is inspected by a professional and signed off. If you had a commercial building, like an office or a hotel, you wouldn't dream of skipping this step. You would also insist on inspections during the build, all of which cost money.

With off-plan purchase, the developers ban site visits during the build, claiming safety concerns. They try to force you to sign a handover document that states you are happy with the property, when you are obviously not qualified to judge.
If we made snagging a legal requirement, a lot of the substandard work will be discovered before you sign the acceptance document.

Nobody wants to spend £500 to a £1,000 on snagging, which will escalate in cost, because the developer will try to fob you off with all kinds of ploys, entailing second, third and fourth visits.

I think snagging insurance would be a good idea.
So when you buy off-plan, you pay, say £200, for snagging insurance. The best scenario would be if extra costs can be recovered from the developer, to reduce their wriggling. Insurance companies have a lot of engineering expertise, let's make use of it.

Pincher

In China, there is a problem with reducing the asking price.
The people who paid £100k for a flat in the previous phase will storm your sales office, and demand that they should pay the new £90k price. If you reduced to £80k, they will beat you up to get their deposit back, which is usually £90k.

The boss is never in the building, so it's usually the security guard who gets beaten up.