Help to buy equity loan.... very unhelpful !!!

sky_rat

From experience I have found the Help to Buy 'equity loan' to be anything but helpful.

To start with, it is only available on new build properties which makes it very difficult because:

1 - The government requires that 30% of all new builds MUST be allocated to the 'Housing Association'
2 - The properties allocated for the housing association are clearly going to be the cheaper and more popular 2 and 3 bedroom properties. The 4 and 5 bedroom properties are less likely to be allocated for the housing association, which means the majority of properties allocated to the housing association end up being the 2 and 3 bedroom properties.
3 - There are limited new builds being built, demand is high but supply is low

At the start of the year I put my name down for a 2 bedroom new build and I was approved for a mortgage agreement in principle. The property was priced at a ludicrously, over inflated price of £265k (in Milton Keynes) and my parents were able to help with a £20k deposit. The help to buy equity loan was £53k (20%) meaning that the mortgage was for £192k. I was told I would be invited to the pre-launch to choose a property and I would be given priority because I had an agreement in principle. Despite this, the sales office neglected to invite me to the pre launch and all the houses were sold so I missed out. There will be more houses available later in the year and I have been assured that I will be invited to the pre launch this time, but the prices are rising so fast that they are likely to be higher and potentially out of my price range.

To highlight how unhelpful the help to buy equity loan is, consider these figures from the new build site I am still on the waiting list for:

For the current launch phase (which I missed out on), there will be a total of 16 two and three bedroom properties built. Of those 16 properties:
- 12 have been allocated for Housing Association (i.e. 75%)
- This leaves only 4 two bedroom properties for private buyers (i.e. 25%)

For the next launch phase, there will be a total of 24 two and three bedroom properties built. Of those 24 properties:
- 12 have been allocated for Housing Association (i.e. 50%)
- This leaves only 12 two bedroom properties for private buyers (i.e. 50%)

With such a limited number of new builds available and the fact most of the smaller properties are allocated to the housing association, the government help to buy is virtually no help what so ever.

I did find another property and made an offer of £255k which was accepted (it was bought for £195k 18 months ago so thats a £60k rise!). I naively assumed I could still use the help to buy equity loan, but as it wasn't a new build (18 months old) I soon found out that the equity loan couldn't be used. This meant I was short by £51k, which would otherwise have been provided by the equity loan. The estate agent didn't bother to inform me that the equity loan can only be used on new builds and so I had no choice but to cancel the house purchase… yet another disappointment and let down.

My budget is £250k for a new build (using the help to buy equity loan) or £200k for a used property, yet its impossible to find a 2 bedroom house for £200k in Milton Keynes. Especially as it is a commuter town for people who work in London.

At the age of 39 I have never bought a property and I’ve had to rent for the last 9 years. With the average mortgage term being 25 years or more, if I don’t get on the housing ladder very soon I will still be paying a mortgage during my retirement. Either that or I won’t ever get on the housing ladder and have to rent for the rest of my life.

I have a professional qualification (BEng with honours 2.1) and a professional career which I work hard at. Despite this and the fact I have help from my parents for a deposit, I am still unable to buy my own property. So I have to continue to waste £900 a month on rent for a small 2 bedroom apartment. I am also a single parent (non-resident) which is why I need a 2 bedroom property for when my 9 year old daughter stays with me.

It makes me seriously question why I bothered working so hard at school, college, university and in my career. People on benefits get priority as most of the new builds are allocated to the housing association, yet despite working hard all my life there is very little chance of me being able to buy a property. Ironically, I keep encouraging my daughter to work hard at school and explain the reasons why its so important. Then she questions me why I didn’t work hard at school because she has grown up knowing that I cannot afford to buy a house or even replace my old car that I depend on to get to work (which is 50 miles north from where I live).

So to summarise, I have found the government Help to Buy equity loan scheme nothing but… well... unhelpful.

Elfbert

Are you sure the housing association properties are for 'people on benefits', rather than things like rent-to-buy, shared ownership etc.? Have you actually enquired about these properties?

sky_rat

Elfbert wrote: »

Are you sure the housing association properties are for 'people on benefits', rather than things like rent-to-buy, shared ownership etc.? Have you actually enquired about these properties?

I have been told that these houses are not available to purchase for the general public/private buyers. The 'Housing Association' will find tenants to put into these properties. They have specifically told me that these properties will not be available to myself. I asked to clarify what the 'housing association' is and was told it was for people on benefits. I was told that people who cant afford to put a roof over their head deserve to be given somewhere to live. I explained that I work hard and deserve to be able to buy my own property !

Southend1

sky_rat wrote: »

I have been told that these houses are not available to purchase for the general public/private buyers. The 'Housing Association' will find tenants to put into these properties. They have specifically told me that these properties will not be available to myself. I asked to clarify what the 'housing association' is and was told it was for people on benefits. I was told that people who cant afford to put a roof over their head deserve to be given somewhere to live. I explained that I work hard and deserve to be able to buy my own property !

Housing association properties aren't necessarily for people "on benefits". You could look into purchasing a share of a property via a housing association if you can't afford to buy without assistance in the open market.

kimbyanne

I am possibly one of these people you seem to have a problem with. I live in a new build two bedroom property which is classified as affordable housing. We own our house via shared ownership, we arent on benefits, we both work and saved hard to get a mortgage on our house.

I think you are confusing housing association with affordable housing. All developments over a certain number have to provide affordable housing, which includes housing association housing and shared ownership, it's not all given to people on benefits who don't work, etc.

Have you ever looked into shared ownership? It may be a way for you to get a house. You would need to check you are eligible though, for example you cant earn more than £60k (higher for London), etc

blahblahblah85

sky_rat wrote: »

My budget is £250k for a new build (using the help to buy equity loan) or £200k for a used property, yet its impossible to find a 2 bedroom house for £200k in Milton Keynes. Especially as it is a commuter town for people who work in London.

That's just not true, looking on right move now there are plenty under £200k for a 2 bedroom 2nd hand market, with many being in desirable areas such as Newport Pagnel etc.

Where are you renting now? I live in the area and have also been house hunting but I think your prices are higher than what I've experienced. Brooklands were emailing me about their unsold 2bed new builds only a few weeks or so ago £205k I think, they are around 65sqm.

arbrighton

Can you move closer to where you work, and use the car less apart from for coming to collect daughter?

Thrugelmir

sky_rat wrote: »

F
At the age of 39 I have never bought a property and I’ve had to rent for the last 9 years. With the average mortgage term being 25 years or more, if I don’t get on the housing ladder very soon I will still be paying a mortgage during my retirement. Either that or I won’t ever get on the housing ladder and have to rent for the rest of my life.

Why have you never saved any money? Even now your parents helping you out. How one spends ones money is a personal choice. So I'm not being intentionally judgemental. But saving for a deposit has always required serious effort for most people to achieve. It's not something new.

varghesejim

Help to buy is actually a help for builders.

Expensive new homes shouldn't be for first time buyers. The government is luring them to it by offering help to buy and potentially forcing them to many years of negative equity.

owned homes are cheaper than new ones and you should get a decent mortgage deal with 10 percent deposit. Start saving!

Bigbenning

Your 39, surely you must of saved some money? Instead of blagging off your parents, blagging of the government, and then moaning when it doesn't go your way. I'm sorry but that's life, you get out of it what you put in.

If that was me during that first phase when they didn't contact you I would of been at that building site everyday knocking on the office wanting to know what is going on but you was being lazy and lost out. Nothing comes for free not matter how much you think you deserve it.

Really grates me when people think they deserve something out of life, here is a pointer, you can think you work hard all you want but if your not working hard on other aspects of your life (like saving for a deposit) there's not much point

harrys_dad

Stop feeling sorry for yourself. What you are actually showing is that the real problem for housing in this country is lack of supply. Incentive schemes like this just raise prices without boosting supply, hence they inflate the profits of the house builders. Wrong problem, wrong solution.