Open Market Discount Scheme - First time buyers

NorthernerDownSouth

Hi all,

My wife an I have just been to see a property on a new build estate (built in 2016) which is on the market ONLY to First Time Buyers who have lived or worked in the area for at least 2 years. The property comes with a 25% discount for people who fit this criteria (which we do) and is on the market for £360,000. Therefore the "full market value" is apparently £480,000. Whilst the house is very nice - and to be honest, perfect for us - we don't think it is worth £480,000 on the open market in million years.

The vendor (and first owner) purchased this new build for £266,250 in April 2016, which, assuming takes into account the same 25% discount as a first time buyer, represents around a 35% increase in value of this so called First Time Buyer property which seems ridiculous.

It would appear to me that the estate agent has vastly over valued it at £480,000 rather than an independent valuation being done and therefore the whole point of this house being discounted by 25% to first time buyers has been taken away. There are no other properties of that size on the same estate (or in the local vicinity for that matter) that have sold for anywhere near that kind of money.

My question is, who, if anybody, regulates the resale of these Open Market Discount Scheme - First Time Buyer properties? It seems to me that the only parties to benefit from it are the current (First) owner and of course the greedy estate agent.

Any advice on how the scheme should really work would be appreciated.

Cheers.

AdrianC

If you don't think it's worth you paying ~£360k for, then either look for a different property, or make a lower offer.


How do the vendor and EA "benefit", if it's so overpriced nobody's going to buy it?

You'll probably find the discount is a requirement of the local authority's planning permission. Nobody regulates how much people advertise properties for, except buyers and their lenders, through simply refusing to pay that much.

NorthernerDownSouth

Thanks Adrian,

My understanding of the Open Market Discount Scheme is that any resale of the property has to be to first time buyers and at 25% discount of the market value, with priority given to people living or working in the local area. The market value at the time the house was built is what all the houses on that estate are being sold for - fair enough, the scheme works, but if the resale value 3 years down the line is then dictated by an estate agent, then the 25% discount incentive is taken away as the estate agent just over inflates the market value. They know they can get away with this as there are always going to be FTB's that are desperate to get on the ladder and they will be drawn in by the headline discount percentage.

I suppose I'm just thinking that the scheme would work far better and be much more beneficial to future FTB's if the resale market value was done independently of the estate agent.

AdrianC

So in other words, there are people who don't think it's overpriced, so will pay it.

That's how prices work, yes.
The seller asks what they think they can get. A buyer pays it if they think it's worth it. That's the market value.
You, apparently, aren't that buyer. Back to RM, then.

Slithery

If you don't think that it's worth the asking price then don't buy it. It's really that simple.

Crashy_Time

Run away, don`t be conned into over-priced property, prices are only going one way IMO.


https://www.independent.co.uk/news/uk/politics/eu-immigration-sajid-javid-home-secretary-slash-brexit-a8685646.html