Barratts dream start help desperately needed - we may be forced to sell our home

mrmee100 · 24 January 2014 at 3:36PM

Barretts homes sold hundreds of properties on the leybourne park complex, Larkfield (2008) at well above market value as do most new build projects. The dreamstart scheme was that you mortgaged 75% and Barretts retained 25% repayable within 10 years or on sale of the property. The bit I would like to drum up interest on is that most properties have gone done by at least £40,000 and cannot sell nor remortgage. Barretts have put into writing to myself they would accept the loss and let people sell but later refused. They are letting different property owners settle the 25% outstanding for all different sums of money and cannot provide anything in black and white to explain their procedure if the property is in negative equity and why they are treating people differently. I have correspondence from a Barretts financial advisor and proof of two properties that have settled for different amounts. It would be really interesting to put the story out there and see how many different stories there are and if there is some sort of fraud occurring. I know for a fact they do not pursue the 2nd charge if the property is repossessed. I also have evidence that my next door neighbor bought for 188,000. Sold for 137,000. payed off the mortgage of 133,000 and Barretts removed the second charge for £4000. Anyone else got any evidence? I am looking to take them to court.

mrmee100 · 26 January 2014 at 9:21AM

Also, in my 2nd charge contract it states that in examples of financial hardship the loan may be extended by 1 to 5 years. Which is fine if you want to stay in the damn place.
On our complex the prices have dropped by around 30%, if interest rates start to creep up then Barrett's will have a whole load of repossessions on their hands and get nothing.
The renting value is 750pm. If your lucky enough to get a ' consent to let' for 2 years it's around 5.5% (or £660) for me. Add on the ground rent for peveral to pick their nose @ £100 a month. Add on the letting agents fee of at least £100 pm and straight away I am down 110 pound a month.
So in review, I've lived in the property 6 years, it's depreciated by £50,000, I can't remortgage for any security, I'm in the minus if I rent it and Barrett's won't physically let me sell it ( release the 2nd charge) unless I save up 38,000 for them.
So really I just sit here waiting for interest rates to go up to a point I can't afford it and declare myself bankrupt. Cheers Barrett's, what a 'dreamstart' you have given me.

AesopsAnt · 22 October 2014 at 7:00AM

Hello,

I'm interested in the follow up to your experiences with Barratts Dreamstart scheme, as a family member is in a similar situation. She bought through the scheme in 2007, and has just tried to get the ball rolling with estate agents and valuations in order to sell and move to a different town, but was told it would be impossible due to the negative equity on her house. The 25% equity loan on said house is due to be repaid in 2017, and will be roughly (by today's valuation estimates) £40k. It appears that nothing has so far been saved towards this, leaving very little time to come up with that amount of money. I think everyone in the family assumed that she had had a strategy in place the whole time, but now it's become apparent that she didn't, so I'm worried about the potential fall out in 2017.

Really, I just want to ask anyone who also took up this scheme what action you've taken, and whether anything has worked to your advantage? Do you know what the criteria might be to extend the loan, or are Barratts very reluctant to do that?

The family member I've mentioned doesn't seem to realise the seriousness of her situation - she expects to be able to remortgage in order to swallow the equity loan. I'm skeptical about this due to the lack of/negative equity, although she and her husband are on good salaries (roughly £50k pa combined).

Thanks for reading

Idiophreak · 22 October 2014 at 9:39AM

AesopsAnt wrote: »

Hello,

I'm interested in the follow up to your experiences with Barratts Dreamstart scheme, as a family member is in a similar situation. She bought through the scheme in 2007, and has just tried to get the ball rolling with estate agents and valuations in order to sell and move to a different town, but was told it would be impossible due to the negative equity on her house. The 25% equity loan on said house is due to be repaid in 2017, and will be roughly (by today's valuation estimates) £40k. It appears that nothing has so far been saved towards this, leaving very little time to come up with that amount of money. I think everyone in the family assumed that she had had a strategy in place the whole time, but now it's become apparent that she didn't, so I'm worried about the potential fall out in 2017.

Really, I just want to ask anyone who also took up this scheme what action you've taken, and whether anything has worked to your advantage? Do you know what the criteria might be to extend the loan, or are Barratts very reluctant to do that?

The family member I've mentioned doesn't seem to realise the seriousness of her situation - she expects to be able to remortgage in order to swallow the equity loan. I'm skeptical about this due to the lack of/negative equity, although she and her husband are on good salaries (roughly £50k pa combined).

Thanks for reading

Do you know how much negative equity they have?

On the information you've given us, sounds like they can still get out of this if they're disciplined....They have three years to save, if they could put away £500/month (sounds possible, based on their income and the size of their mortgage) they'd have 18k in the bank....if house prices go the right way, or stay flat, plus they'll pay a little more equity in through their mortgage payments...they're not going to be far away from a 10% deposit to re-mortgage...stick some bills on credit cards for a couple of months to get them over the line. Sorted.

What you should stress to them is that it's really in their interest to get rid of the loan...so they just need to knuckle under and get saving for a bit.

AesopsAnt · 22 October 2014 at 10:11AM

Thank you for your reply Idiophreak,

I don't think the negative equity is too severe at this point, at least I was told "about 1k or 2k", which doesn't seem too bad since the valuation of the house was for between 23k and 33k less than what was paid in 2007. I'm not sure whether the higher or lower valuation was used to calculate the negative equity though!

Thank you for your advice re saving as much as possible, I'll put that forward to them. Probably like a lot of people who took advantage of this scheme, their circumstances have become a lot tighter in the last couple of years since they've had two children and are paying nearly 1k per month on childcare, in addition to paying back other loans.

Hopefully it will all work out!

Idiophreak · 22 October 2014 at 10:32AM

AesopsAnt wrote: »

Thank you for your reply Idiophreak,

I don't think the negative equity is too severe at this point, at least I was told "about 1k or 2k", which doesn't seem too bad since the valuation of the house was for between 23k and 33k less than what was paid in 2007. I'm not sure whether the higher or lower valuation was used to calculate the negative equity though!

Thank you for your advice re saving as much as possible, I'll put that forward to them. Probably like a lot of people who took advantage of this scheme, their circumstances have become a lot tighter in the last couple of years since they've had two children and are paying nearly 1k per month on childcare, in addition to paying back other loans.

Hopefully it will all work out!

The good news, then, is that the negative equity should be gone by 2017 with any luck. (FWIW, they should use the average of those two valuations for their calculations). So it's just the deposit that's an issue...

To be honest, it sounds like they're going to struggle to save enough in the next couple of years, with their other outgoings. So they have a couple of options:

1) Start speaking to Barratts now about what they do. I imagine they'll be more sympathetic to them the sooner they're in the loop.

2) Be gifted a deposit from sympathetic friends or family.

3) Look at borrowing the deposit somehow. Now, of course, no lender's going to accept a loan as the source of their deposit, so they have to be more "creative" about things...if they have some credit card debt, and some savings, that's fine. If they have an outstanding loan and some savings, that's fine. They have existing loans already....maybe they could be extended to bring in a bit of extra cash (which might be used to pay off some credit cards, say)...the trick, from their point of view, would be in borrowing enough money for the deposit (and re-mortgaging costs), but not enough to damage their chances of getting the mortgage...

Option 3 represents a pretty "grey area" in terms of fraud, so I'd suggest reverting to option 1 is safest...but thinking about how they'll ever actually save their deposit...is their best option.

AesopsAnt · 22 October 2014 at 11:52AM

Thanks again Idiophreak, your points and ideas are very good - it also helps I think to get an outside perspective. When it comes to money matters I lean towards a doom and gloom sort of outlook. You're right, at the moment option one does seem the safest. Unfortunately option 2 may be out since a couple of the outstanding loans I mentioned were from sympathetic family, and I'm unsure if there is any more to borrow from that quarter.

joolsyp · 22 October 2014 at 2:36PM

Re:option 1 - I am in a similar position but with far more negative equity than the poster's family member. I approached Barratts about 6 months ago and they were wholly unsympathetic and unwilling to discuss my situation. I have about 12 months left before I am due to pay back the loan so will try contacting them again soon. Due to the fact I had an IVA (now discharged) I have been stuck on a high % mortgage (albeit interest-only) and have been unable to save. Unless Barratts are willing to extend the loan period (at a fair rate of interest) I can't see any alternative but bankruptcy sadly.

I would be interested in hearing from anyone in a similar situation who has offered Barratts a sum of money less than the total amount of the loan (or 25% of the value of the property) and what their response was?

Regards

J

Idiophreak wrote: »

1) Start speaking to Barratts now about what they do. I imagine they'll be more sympathetic to them the sooner they're in the loop.

2) Be gifted a deposit from sympathetic friends or family.

AMILLIONDOLLARS · 22 October 2014 at 5:21PM

Just been reading this post and came across these article written in 2008, seems their predictions have come true!

http://www.housepricecrash.co.uk/forum/index.php?/topic/66961-my-current-thinking-and-barratt-dream-start/

http://www.thisismoney.co.uk/money/mortgageshome/article-1640540/Buyers-warned-on-shared-equity-schemes.html

I hope Money Saving Expert will now highlight what is going on!!

AMD

AesopsAnt · 22 October 2014 at 7:15PM

AMILLIONDOLLARS wrote: »

Just been reading this post and came across these article written in 2008, seems their predictions have come true!

...

I hope Money Saving Expert will now highlight what is going on!!

AMD

I also came across the sources linked to above (sorry, had to remove links from post or not allowed to post) in my recent research into shared equity. They do make good points.

I think that the 25% equity scheme could have worked for people though, had they started saving to repay it on top of their mortgages on day one (although for a repayment of £40k, saving £330 per month, every month for 10 years may be a tall order). I guess the truth is really that there's no getting out of saving for a deposit if you want to be a home owner, whether you save it before buying, in the years after you've bought, or even if you unfortunately end up back at square one having lost your house. It might have been a better idea for Barratt et al to insist on some sort of repayment vehicle instead of just leaving the strategy entirely to the buyer, but that obviously would have looked a lot less attractive.

joolsyp, I'll post the outcome of any negotiations with Barratt Homes when I find out, although at this stage the family member I've mentioned is saying she'll "worry about it nearer the time" so it may be a while in the future...

Barratts dream start help desperately needed - we may be forced to sell our home

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