Is it really all that bad?

thriftybabe

It is going to get worse. Brief history my OH and I run small joinery business - one site was closed a few months ago after only 22 house out of 201 being built due to lack of sales. Just been told today that one of our other site which was a build out is now going to stop. I am afraid it is going to get worse. Unless you work as a Public Sector worker where the Government finance your wages you probably won't be hit. Anyone expecting bonuses will see them drastically cut or not even get one once this starts affecting the rest of the economy. At the moment it is only housebuilders, third parties and with a slight downturn in retail but will soon spread.

Treadmill

I have a good new build story but its chirpily optimistic and I've not posted many times so I'll save it for fear of being labelled a spammer lol

It involves getting a mega amount of goodies when negotiating on a new build though lol

johng_uk

The Media are blowing it out of proportion.

I think we'll wait and see on this comment!! Time will tell............

MrDT

iyiarz wrote: »

Spoke to the estate agents over the weekend and she said 'It's really not as bad as some people make out.'

Breaking News : Turkeys cancel Christmas.

posh*spice

thriftybabe wrote: »

Unless you work as a Public Sector worker where the Government finance your wages you probably won't be hit.

Not if David Cameron has anything to do with it- he's talking about cuts in the public sector already and he hasn't even won yet:o

lypsey

The Guru

Take 5 minutes and do some research. My question is this , if you went to the top 10 banks in the high street, what would they offer you on your investment if you were a first time buyer or didn't have much equity in your house

I suspect that on NEW BUILDS (only) you would only be offered approx 75% of the value at nearly all the banks.

If I am right your "bargin" looks very very poor because the banks are obviously expecting much more of a drop than your 12.5%



PS. This offer of paying your 12.5% deposit really really hacks me off , it skews the figures at the Land Registry and is a totally absurd situation

lostinrates

lypsey wrote: »

PS. This offer of paying your 12.5% deposit really really hacks me off , it skews the figures at the Land Registry and is a totally absurd situation

Goodness, I hadn't though of that, how ridiculous of me. Thank you for pointing that out.

iamstacie

lypsey wrote: »

PS. This offer of paying your 12.5% deposit really really hacks me off , it skews the figures at the Land Registry and is a totally absurd situation

Sorry, I don't understand this last bit, please explain this to me? Where I am (NW) I've seen loads of houses on rightmove listed as 5% deposit paid/vendor will pay deposit - mainly with Bridgfords. I don't know how this works

hostman

iamstacie wrote: »

Sorry, I don't understand this last bit, please explain this to me? Where I am (NW) I've seen loads of houses on rightmove listed as 5% deposit paid/vendor will pay deposit - mainly with Bridgfords. I don't know how this works

The person selling the house "gives" you 5%. This allows you to go to your mortgage company and say "I have 5% deposit, therefore I need to borrow 95%" (this is the LTV, "Loan To Value"). But, no money parts hands, the seller does not give you the cash value of that 5%, its not even paper money, the cash equivalent has never existed.

It only becomes real cash when the mortgage company releases the 95% to the seller. The house was probably overvalued by at least 5%. Therefore, the seller receives the 5% deposit from the mortgage company NOT the buyer and still makes a healthy profit on the property.

Its a tactic to keep prices overinflated for longer. The buyer appears to be getting a good deal, but in reality its just one big money making scam. When the house is reported as sold and the sale value is reported to the Land Registry, more often than not the true value of the sale is not reported, i.e. it should be excluding discounts, such as deposits paid. So house price inflation stays higher for longer, due to under hand tactics by sellers / developers and dodgy reporting.

WTF?_2

iamstacie wrote: »

Sorry, I don't understand this last bit, please explain this to me? Where I am (NW) I've seen loads of houses on rightmove listed as 5% deposit paid/vendor will pay deposit - mainly with Bridgfords. I don't know how this works

OK, here's how it works.

The vendor knows that the house is really only worth 180k on the open market, possibly less to get a sale, because it's weak and falling. But he has a load of others to shift and wants to maximise how much he gets for each of them.

He puts house on at 200k and offers to 'pay' a 10% deposit for the buyer.

The buyer thinks "Wow, what a deal. I'm saving 20 grand!". Uses the deposit to obtain a 90% LTV mortgage to the amount of180k from the bank and pays 200k for the house.

That property is now 'valued' at 200k (because it attained that price at sale) which helps keep selling prices on other similar local properties high.

The vendor gets the deposit he paid back anyway, plus the 180k that the property is actually worth so it has cost him absolutely nothing to prop the prices of his properties up by 20k each.

The buyer has ended up borrowing a full 180k to buy something that really is only worth 180k in the market - leaving him instantly at danger of negative equity in a falling market. He also has actually 'saved' nothing in the deal because it still cost him 180k regardless of the dummy "10% gifted deposit". (Maybe he's committed fraud as well if, as likely, he didn't tell the mortgage lender about it!)

The bank has effectively given mortgage of 100% LTV when they thought they were only giving 90% LTV. So they are overexposed and stand to have a lot of trouble extracting the full balance of the mortgage should they subsequently repossess.