HTB - It's started

Graham_Devon

The young couple had tried to scrape together a deposit by cutting back on luxuries and had borrowed money from Jessica’s family.
In the end, it was the Government’s flagship Help To Buy scheme that gave them the financial boost they needed to secure a £205,000 two-bedroom, new-build flat two miles from the town centre.
But just three years later, the young couple — who now have an 18-month-old son, Hudson — are effectively trapped.

Effectively the article looks at a couple who are complaining as they bought a new build for "an inflated price" and are now trapped, as the flat they bought has lost £30,000 in it's value as it's no longer new.

"Experts" in the industry are suggesting that housebuilders are overpricing the houses up to 15%, because they can as HTB enables the bank to continue to lend even on inflated prices.

I entitled the thread as "its started" as I expect to see much more of this type of article, and watch with interest as to the damage limitation action the government may or may not take.

I don't actually blame HTB itself for the position they find themselves in. Combination of things. However, it's not a good advert for the government, or very good for us considering many people could pay back less than they borrowed of taxpayer cash.

http://www.thisismoney.co.uk/money/mortgageshome/article-6131611/Help-Buy-left-trapped.html

HAMISH_MCTAVISH

Newbuild flats often lose money when up for resale in just 3 years.

Whether or not bought with HTB.

Pretty sure the consensus view on here and elsewhere is that buying may well not make much sense if you're probably going to have to move in 2 or 3 years. And that holds true regardless of HTB.....

wymondham

I'm not a fan of Government intervention in someone's private finance (house buying) but the couple are naïve if they thought they would be able to get enough equity to move on after doing pretty much everything to slim down their chances....


New Build - tick
Flat - Tick
Government Scheme - tick
Excessive spending - tick

basically, a perfect storm of poor decisions.

Carl31

Surely a surveyor valued the flat on purchase and determined its value?

HTB had nothing to do with that, HTB just allowed them to meet that valuation

I read that article, the journalist made a comment about the property being full of toys hence needing more space. 18 month olds dont need that many toys

Enterprise_1701C

This is one reason why I would never buy a new house. "New" in anything seems to come at a premium.

We bought our house when it must have been about 18 years old, since when it has never been worth less than we paid for it.

Computer_Beginner

If UK house prices are flattening now (obviously a massive over-generalisation, as all areas of the UK are different), then what will happen if interest rates go up?

At the moment UK rates are low and many buyers are 'locked in' to low rate mortgage deals. But if the US Fed keeps gradually raising rates, then the BoE may follow. That would mean higher rates for new buyers.

But no one knows for sure because:
1. The Fed may not raise rates higher.
2. The BoE may choose not to follow and so let the pound drop against the dollar.

So who knows..?

kinger101

Carl31 wrote: »

Surely a surveyor valued the flat on purchase and determined its value?

HTB had nothing to do with that, HTB just allowed them to meet that valuation

I read that article, the journalist made a comment about the property being full of toys hence needing more space. 18 month olds dont need that many toys

A surveyor's valuation on a new-build flat is about as robust as an auditor's statement on Enron.

davidwood681

Graham_Devon wrote: »

Effectively the article looks at a couple who are complaining as they bought a new build for "an inflated price" and are now trapped, as the flat they bought has lost £30,000 in it's value as it's no longer new.

"Experts" in the industry are suggesting that housebuilders are overpricing the houses up to 15%, because they can as HTB enables the bank to continue to lend even on inflated prices.

I entitled the thread as "its started" as I expect to see much more of this type of article, and watch with interest as to the damage limitation action the government may or may not take.

I don't actually blame HTB itself for the position they find themselves in. Combination of things. However, it's not a good advert for the government, or very good for us considering many people could pay back less than they borrowed of taxpayer cash.

http://www.thisismoney.co.uk/money/mortgageshome/article-6131611/Help-Buy-left-trapped.html

Reminds me of a storyline in the Sopranos :rotfl:

Pixie5740

The couple in question bought a new build flat in Cove Bay, Aberdeen 3 years ago. That would be Aberdeen a city with an economy dependent on the oil industry. Can anyone remember what happened from June 2014 to January 2015? The price of oil dropped by 60% which lead to the operators making people redundant which then had a knock on effect to oilfield service providers and other industries within the city because people who were once had money to burn suddenly had no income. It's only starting to recover now.

This couple's predicament has little to do with HTB (I'm not saying one way or the other whether HTB is a good idea) and mostly to do with the local economy, selling in such a short time frame won't help either. It's not just new builds that have been affected in Aberdeen. I've seen 2-bedroom tenement flats in Rosemount (much nicer area than Cove Bay with access to better schools) that were selling for over £200k pre oil price slump to selling for circa £150k and that's after sitting on the market for months when before they were going to closing within a fortnight.

If you look on ASPC there are lots of 2-bedroom flats for sale across Aberdeen that no one is buying and no one wants to rent.

The upside is it also means more expensive properties aren't shifting as easily either. I know a few people who were able to upsize from flats to houses in Cults that couldn't have done that before the slump. Really if the Cove Bay couple looked at their situation more pragmatically then they could probably save more than £30k when upsizing so the net effect would be in their favour.

Pixie5740

Actually if anything HTB has helped to cushion the couple in the article from a falling market.

Pixie5740

Charles and Jessica also appear to have a beef about the factoring fees. No doubt those won't be helping with the value of their flat either.

https://www.pressandjournal.co.uk/fp/news/aberdeenshire/1535916/north-east-couple-claim-factoring-costs-hike-is-pushing-them-into-bankruptcy/