Oops

[Hector's House]

From MSE:

http://forums.moneysavingexpert.com/showthread.html?t=498427

interesting that the bank wont let them swap to a Buy-to-Let mortgage so they can rent the place out.

I cant imagine how many people must be caught up in traps like this.

[Goldfinger]

Sounds really bad. They should STR, and take whatever they can get.

[Guest KingCharles1st]

Its quite simple- Its called NEGATIVE EQUITY

As I said last week sometime-

the thing is- the quicker we ALL start using the word- it will spread like wildfire- believe me

Negative equity, negative equity negative equity-

[joey]

From MSE:

http://forums.moneysavingexpert.com/showthread.html?t=498427

interesting that the bank wont let them swap to a Buy-to-Let mortgage so they can rent the place out.

I cant imagine how many people must be caught up in traps like this.

[DoctorJ]

However, I did get some warning bells when the mortgage valuation came back at £230,000. I spoke to our financial advisor (one of Barratts agreed advisors) about my concern at paying £15,000 over the valuation and he said "it happens all the time with new builds, don't worry about it". So, we didn't worry and went ahead.

Classic

[joey]

From MSE:

http://forums.moneysavingexpert.com/showthread.html?t=498427

interesting that the bank wont let them swap to a Buy-to-Let mortgage so they can rent the place out.

I cant imagine how many people must be caught up in traps like this.

When Developers start giving incentives e.g Pay Deposit, Solicitors fees, Part-Exchange you know they are having problems shifting them. These should send alarm bells. During the boom you got bugger all. I can't believe they used one of the Developers Financial Advisors when the valuation came in undervalued and asked them for advice, isn't he/she bound to be a bit biased in giving them advice ??????

Its the usual herd mentality you see it in all investments whenever you rush into anything without doing your research.

[SarahBell]

taking into account a small mortgage break we took to get married and pay for the wedding

AGGGGGGGGGGGGHHHHHHHHHH So they rush madly into buying a flat then stop paying the mortgage to pay for a wedding. Seriously badly advised.

[Fancypants]

Its quite simple- Its called NEGATIVE EQUITY

As I said last week sometime-

the thing is- the quicker we ALL start using the word- it will spread like wildfire- believe me

Negative equity, negative equity negative equity-

did somebody say negative equity?

[Austin Allegro]

This post is hilarious:

Quick check of the OP's earlier posts and this thread actually seems for real. Sorry for my cynicism but there are plenty of people wishing for a collapse in the housing market and this is just the sort of thread that they would conjour up! So yes there are a few people in this predicament but sadly some are just winding us up! Kind of sick really.

Property's not crashing folks, move on, nothing to see here.

[Goldfinger]

When Developers start giving incentives e.g Pay Deposit, Solicitors fees, Part-Exchange you know they are having problems shifting them. These should send alarm bells. During the boom you got bugger all. I can't believe they used one of the Developers Financial Advisors when the valuation came in undervalued and asked them for advice, isn't he/she bound to be a bit biased in giving them advice ??????

Its the usual herd mentality you see it in all investments whenever you rush into anything without doing your research.

In Edinburgh they promise you free food from Harvey Nichols for one year if you buy certain (I think Barrats) flats.

Just seen last week.

[dstars]

"Otherwise, we are stuck here waiting until the market catches up to what we paid for it which could be years."

And years and years and years and years.

This is interesting and shows us the psychology that makes a crash inevitable. It's like they think it's written in the qu'ran that they should make money on this deal. It has not even occured to them that instead of 'losing' 15 grand with a sale they'll end up losing everything.

These people will not take a loss. They simply refuse to accept reality. The hardest thing of all is to cut one's losses. It is so painful and doubly so when one feels stupid.

There are going to be an awful lot of auctions in the next couple of years. And this shows us why it takes so long for prices to come down. It's like a great weight on a dam, building kinetic energy as more and more people want to sell but 'can't get the right price'.

Housing crashes usually take a long time as prices wheeze their way downwards. I believe this time will be different because of the buy-to-let brigade.

Soon after Halifax and the other shysters are no longer be able to keep claiming that prices have gone up 1.2% or 0.6% or 0.2% and even they admit negative 'growth', there will be an almighty rush for the door.

Prices of flats will plunge and we'll be told that 'house' prices are safe; only flats are trash. Then house prices will creak and topple over as well; more slowly but just as surely.

It's quite strange because the people who are in trouble right now are the ones who have a chance to get out with minimal losses. They think they've been stupid but they weren't anywhere near as stupid as they are being right now by complaining instead of selling.

Nevertheless, this type iof story must be absorbed into the general mythology surrounding the market in order for the inevitable to take place.

It's like watching a film one has seen many times before. We can shout the answer at them as much as we want but their own greed and desperation is what will make them ultimately lose multiples of the current losses they face.

[laurejon]

Right fellow muppets lets explain this for you.

The housing market is not crashing, developers have always overpriced their properties so they can offer incentives and discounts.

If you are offered deposit paid, 10% cashback,stamp duyt paid, legal fees for free, and a brand new Aston Martin in the garage, did you really think the developer was paying for this? Are you that dumb?

All new housing has what is called a new house premium, and its because vendors who were first owners had discounts the are not detailed in the sale price. So the price looks high, but when you deduct the discounts its more realistic.

The reason they cannot get a BTL mortgage is that every lender on BTL wants to see a rent of 125% of the mortgage repayments. Its that simple.

So go back to sleep, and wake up early next year when the market will really start to crash.

[MarkG]

The funny part is that they paid nearly quarter of a million pounds for a flat in.... Feltham.

[joey]

Right fellow muppets lets explain this for you.

The housing market is not crashing, developers have always overpriced their properties so they can offer incentives and discounts.

If you are offered deposit paid, 10% cashback,stamp duyt paid, legal fees for free, and a brand new Aston Martin in the garage, did you really think the developer was paying for this? Are you that dumb?

All new housing has what is called a new house premium, and its because vendors who were first owners had discounts the are not detailed in the sale price. So the price looks high, but when you deduct the discounts its more realistic.

The reason they cannot get a BTL mortgage is that every lender on BTL wants to see a rent of 125% of the mortgage repayments. Its that simple.

So go back to sleep, and wake up early next year when the market will really start to crash.

Lets say stagnant and empty at this stage. The new Ghost Towns of England. I have alot of sympathy with developers going broke, you don't happen to be flogging one do you.

It will be free holidays next if you buy this pad plus you will have carriages and horses to the door and be given your set of keys.

Edited July 10, 2007 by joey

[thedebtisreal]

The funny part is that they paid nearly quarter of a million pounds for a flat in.... Feltham.

Hey! I grew up in Feltham.

OK, only until the age of six when my parents decided it was becoming too rough to raise kids. They paid 35k for a 3 bed house in 1978.

[Objective Developer]

Right fellow muppets...

What a tit.

[dog]

From MSE:

http://forums.moneysavingexpert.com/showthread.html?t=498427

interesting that the bank wont let them swap to a Buy-to-Let mortgage so they can rent the place out.

I cant imagine how many people must be caught up in traps like this.

Rapidly rising prices in recent years has seduced buyers into believing that they can get something for nothing from builders. Now that house prices have stalled in many parts, house buyers are discovering the truth. This young couple who were not sharp enough to realise that builders have to make a profit.

Having discovered that they have an asset which is worth less than they paid, they now want to let it out for less than the cost of ownership. They are a remarkably stupid young couple.

Not surprisingly, the lenders see this as a bad risk for BTL. Instead of recognising the red flags, this couple of idiots are looking for other ways to renting it out. They are determined to go broke. In ten or fifteen years this flat could be worth half its current value.

[It is different this time]

I spoke to our financial advisor (one of Barratts agreed advisors) about my concern at paying £15,000 over the valuation and he said "it happens all the time with new builds, don't worry about it". So, we didn't worry and went ahead.

Unbelievable the muppets paid £15K more than the valuation and now throwing their toys out of the pram. Stupid would be a 'polite' word to describe them and the worst part is they are not alone!

Bring it on about time sheeple learnt that house prices can also go down as well as up.

[Nationalist]

A few choice quotes...

We have a mortgage of £223,000 on a fixed rate of 4.69% until Feb 08.

I see an inevitable conjunction of sh*t and fan coming up....

In the meantime we'll keep it on the market to sell and hope someone who is as bad at due dilligence as us buys it!

Ah, the greater fool! You can always hope for a greater fool....

(My advice would be: let now for what you can get, until the teaser rate mortgage runs out, then either sell if the market has risen, or abandon if it has fallen.)

[mikthe20]

The funny part is that they paid nearly quarter of a million pounds for a flat in.... Feltham.

I drove through there the other day - can't believe how many of these "luxury executive apartments" [sic] they have managed to squeeze in and how busy it is there. ONE QUARTER OF A MILLION POUNDS. With interest, some people will be paying almost HALF A MILLION POUNDS for a poxy flat in poxy Feltham. Sink estates of the future. Has nice river/pond in front though, although with all the crap and trolleys in it it's probably about as clean as the Ganges.

[r thritis]

Its odd isn't it how they really seem to believe that they paid £245k for it, despite the develeoper giving them 5% of it back.

If I buy something in a shop with 10 quid and they give me 50p back, I reckon I paid £9.50 for it.

[Wad]

New build housing is a retail market - pure and simple. It is not a wholesale market where professional investors look at yield and margin above financing costs.

People think of buying a new build house like they think of buying a new car. They look at the financing cost and the paintwork and whether it has a CD player and heated seats but forget its going to lose 20% of its value the moment they take it off the garage forecourt and a further 20% every year after that.

New build houses are all about luxury living, executive home, stylish kitchens and power showers. Developers emphasise these points because frankly the actual value of the property on a pure rental investment basis is far less than the advertised sale price.

Many people who bought new build in the last five years will face this ugly reality and be stuck with their decision for the next ten years before they can exit. Property prices do always go up - its just a question of how much and how long you have to pay out in finance, insurance and maintainenece costs in the meantime over and above the rental income before you can get your hands on the capital gain.

Maybe we should be teaching discounted cashflow analysis in school or perhaps the government should put a spreadsheet on a website somewhere for people to download so they can work out the true value of their home based on rental yields.

[Scarecrow]

Its odd isn't it how they really seem to believe that they paid £245k for it, despite the develeoper giving them 5% of it back.

If I buy something in a shop with 10 quid and they give me 50p back, I reckon I paid £9.50 for it.

I found that strange too. It was obviously valued at £230,000 at the time, so why they've got the higher figure stuck in their head is beyond me. That was roughly what their 'initial investment' was - think people are just shocked that they can't get a huge amount of free money back on their house. Hopefully we'll come to a time when people treat their houses as homes, not banks!

[REP013]

Interesting thread. Feltham has, in the last 5 years, been developed with the largest of the LA estates trashed and Argos moving in along with 100's of BTL flats. Most were, as I am led to believe, bought as investment BTL's due Feltham's easy links to London and Heathrow ... but as the saying goes, "You can't make a silk purse from a sows ear!"

A well known group - Oasis, actually filmed one of their videos in Feltham as it was the "most depressed" place they had ever seen. From Noel and Liam this is some accolade.

Unfortunately I am not sure on how representative Feltham is although some people believe Feltham to be part of London?

PS I had the pleasure of living there for 20 years!!!!!!

Edited July 10, 2007 by REP013