Help to Buy affecting sales?

mrsgizzard1

Hi! I live in Grantham, in the supposedly booming (house-pricewise) East Midlands. I have a decent Victorian house which I have sold by the cunning expedient of pricing it at the RICS valuation which caused a sale to fall through earlier this year. But I cannot get a house bought because it seems to me that house valuations are booming, but realism is at an all-time low.

The thing I keep butting up against, when I find a new house for sale, is Help to Buy. Help to Buy seems to be increasing the valuations on certain types of properties, increasing the asking price on geographically close ones, and depressing the valuations on ones further away. The result is that our house keeps selling (as it is vastly nicer than your average David Wilson home), but I can't buy a similar house on the other side of town because its value has been driven up by HTB. And there is very little supply, so this is swiftly becoming a huge issue.

Then there's the added dimension of if I'm trying to buy a nearly new home with HTB on it. The buyer simply can't afford to move on price because HTB says it should sell for a certain price. But it isn't selling for that price. I'm offering £5-10K below, and the seller still can't budge because the driven up valuations are depressing his chance of a sale too.

I feel like HTB has become a massive thorn in the side of everyone is this town, as only very cheap terraces and new build homes are transacting. And, even if I can talk sense to a seller, and the general common sense of a house only being worth what a person is willing to pay for it prevails, the HTB valuation has us coming and going.

As a person with a decent amount of equity, and no need for HTB, but of course a high need for teachers, police staff, and NHS staff, I'm feeling doubly or triply taxed. I already paid for HTB through my taxes. They are servicing an HTB loan and paying a larger than competitive amount of interest. We are all paying over the odds for this loan vehicle which only serves to line the pockets of the house builders, and now I have to pay more than a property is actually worth in real terms, to me or anyone else, in order to make good on the sale of my house.

This seller's HTB loan appear to have been in the region of £70,000 and I find it very hard, when I contemplate the part-time hospital in town, to accept that the money that might have paid the salaries for the staff, was given to him to buy an over-valued house, and has to now be paid by me to pay for the same over-valued house.

What do other people think?

Herzlos

So you're saying they can't sell below a certain threshold because they took out an HTB loan? I suspect that's the case to avoid the government losing money (that it should sell for at least what it was purchased at), but that seems a little backwards.



I'm not sure you can claim it's tax funded, since the buyer needs to repay it with interest anyway.


Is the problem is nothing to do with HTB and that you're only offering £5-10k below the asking price, rather than offering the asking price? If it's a house you really want, what is £5k in the grand scheme of things?

lisyloo

If those people want to sell (and some of them will get hit with debt, death or divorce) then they will HAVE to sell at market value.


You on the other hand will have to buy at what people are willing to sell for and yes it looks like HTB is an issue.


Have you looked for non HTB properties?
or considered upping your offers?

jonnygee2

Help to Buy is definitely having a large distorting effect on the market, in many ways. I think we'll only really find out exactly what effect when it ends. Economists will probably get a lot of joy out of studying it later.

Where I live, it has definitely inflated the value of new builds.

I'm not sure you can claim it's tax funded, since the buyer needs to repay it with interest anyway.

You are right, it's not tax funded, but what has happened is that the government has taken on a huge level of risk on our behalf. It'll all be dandy if house prices hold, but if there's a crash we'll all be paying off the difference.

AG47

wonder what the next phase will be in the help to bubble scheme of things.

Next they may try 50% interest free for 5 years with only. 2.5% deposit required and there may be schemes in place for the government to lend that deposit in the first place anyway.

They have to do some5ing quite extreme to help keep the bubble inflated so much....

kingstreet

mrsgizzard1 wrote: »

The buyer simply can't afford to move on price because HTB says it should sell for a certain price.

On a sale, the HTB redemption figure is the higher of the agreed sale price, or a valuation by a RICS chartered surveyor.

I've not known surveyors be especially fond of overvaluing anything in the last few years.

Cakeguts

I think HTB is causing a lot of problems. For one thing new homes have a premium so the often drop in value once they become not new anymore plus HTB seems to also put a premium on new houses so the effect is a premium on the new house premium. I would think that there are going to be a lot of people in negative equity.

Thrugelmir

Cakeguts wrote: »

I would think that there are going to be a lot of people in negative equity.

Repayment mortgages have resolved that issue.