Help to Buy?

mikedaveross

My first post on here although I've been around since the very early days of reclaimaing bank charges...

So what you may ask has got my back up enough to be posting years later?

Help to Buy.

After 6 years of renting I moved back in with the parents 6 months ago to save a deposit. The news of Help to Buy in April was a good sign for me but 3 month later of saving, searching & putting in an offer on a new build property, I am told by the developer that no offers under the asking price would be accepted on the Help to Buy scheme, claiming 'it costs them money'...

Now, I understand it's their prerogative to decline offers but to openly admit they would take less if you were not on the scheme, screams of them just taking advantage of them knowing the fact that you are getting upto 20% help from the government, a 75% mortgage & can therefore afford to pay the full amount!?!

Morally, if nothing else, it's not really holding up to the promise its name suggests...

Is this the first sign of the much feared artificial price bumping that this scheme would create? Has anyone else encountered something similar?

The developer is Taylor Wimpey, I wonder if this is their policy?

Please someone tell me I am missing something here?!?

HAMISH_MCTAVISH

mikedaveross wrote: »

Please someone tell me I am missing something here?!?

You're missing something here.

Some of these schemes often do cost the developer and/or lender money.

They are partially paid for by contributions from either the developer and/or the bank to cover losses.

So a refusal to discount if you use a scheme has a good reason behind it.

Beyond that however, as these schemes help more people buy and as supply is still tight, prices are likely to rise not fall.

mikedaveross

Any Idea of the fees a Developer/Lender would be paying to be part of such scheme? Is it per sale or a 'membership'?

My understanding from the blurb is developers get the whole complete 20% funding direct...

HAMISH_MCTAVISH

mikedaveross wrote: »

Any Idea of the fees a Developer/Lender would be paying to be part of such scheme? Is it per sale or a 'membership'?

It varies.

There are and have been a number of these schemes.

It's "per sale" though, not a "membership".

wotsthat

All builders are open to offers. They're just gambling that if you walk away someone else will be along who will pay the full asking price.

Depends how new the development is too. They don't want discounted prices appearing on the land registry early in the development.

I would make a formal offer (by email) rather than just having a 'would you take this' type of conversation and explain you really like the house but can't go any higher. It does appear that the gap between asking and selling price is narrowing but you never know.

mikedaveross

I wonder what the developer is 'losing' per Help to Buy sale then...surely not as much as the 5-10% lost in a lower offer?

Do specific Help to Buy mortgages have a higher interest rate/arrangement fee to recuperate the lender?

Excuse my pessimism, but I'm not entirely keen on the way the scheme insists a financial adviser assesses your situation & gives permission to the developer proceed, along with details of the maximum loan you can afford...

shortchanged_2

wotsthat wrote: »

Depends how new the development is too. They don't want discounted prices appearing on the land registry early in the development.

Ohhhh. That's the reason why they need all these schemes to keep up the house prices.

Talk about market manipulation.

wotsthat

shortchanged wrote: »

Ohhhh. That's the reason why they need all these schemes to keep up the house prices.

Talk about market manipulation.

What are you talking about?

Simple common sense. If you're a builder with a development of 300 houses and want to achieve £170k you're hardly going to sell the first few for £150k.

The first buyers will get more stuff as an incentive (carpets etc.) the latter buyers are more likely to get discounts as it become incrementally more expensive to maintain a site presence.

Idiophreak

mikedaveross wrote: »

Has anyone else encountered something similar?

I bought on shared equity four years ago...the builders refused to discount when using the scheme, which I was actually happy enough with - I thought the place was fairly priced to start with.

Sadly for the builder, the mortgage valuer didn't agree, so we adjusted our offer in line with the lender's valuation and ended up getting about 10% off the asking price.

Think the builders (small firm) took it quite personally, though - and sold the rest to cash buyers for the full list price

shortchanged_2

wotsthat wrote: »

What are you talking about?

Simple common sense. If you're a builder with a development of 300 houses and want to achieve £170k you're hardly going to sell the first few for £150k.

The first buyers will get more stuff as an incentive (carpets etc.) the latter buyers are more likely to get discounts as it become incrementally more expensive to maintain a site presence.

So do you think they would get anywhere near these asking prices without all these schemes on offer?

HAMISH_MCTAVISH

shortchanged wrote: »

So do you think they would get anywhere near these asking prices without all these schemes on offer?

Do you think prices would be anywhere near this low if the mortgage market wasn't broken?