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Posts posted by hra

  1. I emailed their news editor about the HomeBuy consultation and went on to make the following points about their article:

    Your article claims the main risk from the scheme is prices could rise while buyers wait for the scheme. I strongly disagree, even though the scheme and its associated "spin" has been seen as a ruse to try and stave off a crash. The main risk is that the [HomeBuy consultation] documents give a completely misleading impression of market conditions. They are based on surveys carried out 4-5 years ago while the market was booming and the general wording of the document underpins this impression. Nowhere do they say that the market has apparently peaked, many economists are predicting falls, that these are a reality, and that many people are finding it actually makes financial good sense to sell up and rent. There are any number of more recent surveys and indicators they could have quoted. What financial advisor would seriously counsel their clients to enter an asset class at the peak of the market, especially one as illiquid as housing, on such a basis?

    Perhaps in a couple of years we will see the mother of all financial mis-selling scandals (if the FSA is still around to police it). Things might not look quite so bright after all.

    Back to your article: Clearly this is not "news": both the stamp duty change and the HomeBuy initiative are not new. The HomeBuy document came out in April and the Chancellor's announcements in May. I am told the BBC "pulled" an article this week after complaints showed it was based on out-of-date financial reports and I suggest you have the grace to do the same.

  2. As for the 'new scheme' and the lack of details, this is generally how the govt does things. Grab the headlines first, then let the details come out later (sometimes when they have actually worked out how it is going to work themselves).

    Just had the most blatant example of exactly that! :angry:

    As some of you know, I've been formally responding to the ODPM's consultation document for Gorgon Brown's "FTB scheme" , whose deadline is 24th June. Oddly, a supplementary document containing "key" data was not available at the outset. It was promised 4 weeks before the end of the 12-week consultation period - in the end it came out 2 weeks before.

    I asked whether the consultation period was going to be extended to take the delay into account, and pointed out that even delaying the extra document until 4 weeks before the deadline was presumably a breach of the consultation guidelines, and that it could invalidate responses people had already made.

    Got the following reply:

    Given the raised profile of the Government's approach to low cost home ownership since the consultation document was published, Ministers felt it was a courtesy to the House to ensure the information in our technical annex was not published during Recess.

    The technical annex provides additional information on the considerations that underpin the proposals set out in the consultation document, and is entirely consistent with them. The Government felt that this would be of interest to those with a more in depth knowledge of the relevant issues and would serve to inform more detailed debate. However, sufficient information is set out in the consultation document itself to allow respondents to give valid, considered views. We do not believe that there is anything in the annex that would invalidate any views that have already been submitted.

    Actually it's so ludicrous I have to laugh.

    1. If the document was deliberately delayed until the recess (!!), even more reason to extend the deadline!

    2. It still does not address my point why the supplementary data was not available for the full 12 week consultation period.

    3. It ignores my point that the data was quite clearly described as "key" i.e. essential. Just like "key workers"! The main document also clearly states the supplementary one would be published in time to "enable consultees to take account of the data ... in forming their responses". It is wholly inaccurate to turn round a couple of months later and claim the document is somehow only of marginal interest (and given the content, it isn't).

    4. It is not a technical "annex" - again they're trying defend their position by downplaying its significance. The supplementary document is almost half as long as the main one and has several supporting surveys and an annex of its own.

    5. My own responses would have been invalidated if I hadn't read the supplementary document. I can't speak for any other people's responses. (Has the ODPM read them all yet?) I would, for example, have claimed there was no economic evidence (which the supplementary doc. supplies) and that no analysis has been done of the reasons people want to buy their own homes (again in the supplementary doc).

    6. The supplementary is much better written and much easier to understand, with worked examples.

  3. As for the 'new scheme' and the lack of details, this is generally how the govt does things. Grab the headlines first, then let the details come out later (sometimes when they have actually worked out how it is going to work themselves).

    Nowhere could this be more true of the HomeBuy consultation process, where a document containing 'key' (that word again) supplementary data was not planned to be made available until 4 weeks before the end of the 12-week consultation period, and in the event was late - barely more than 2 weeks before, without explanation and without extending the deadline.

    If you think about it though, the scheme CAN'T be offered too widely because: 1. The sheer amount of money involved 2. This would drive up prices further and defeat the purpose.

    Personally I suspect there will enough adverse media coverage of developers' role in all this to discredit it to a point where it is meaningless. It is an open invitation to price-rigging. At best, when developers know they can guarantee a sale through one of these subsidised schemes (i.e. the purchase of the property is publicly subsidised as well as the equity loan) it is hardly an incentive to reduce prices to current market levels or even stop building.

  4. ;) I have a couple of questions:

    1. If, for whatever reason, someone decides they HAVE TO buy now, which type of properties are likely to suffer least in the coming crash? Flats or semis? Near a park?  Near transport? In which parts of the country? Any ideas?

    2. Can anyone help with a list of the criteria to be considered when comparing renting and buying, including things we tend to forget such as the opportunity cost of not saving mortgage payments? Can you show how to caluclate them? (Not very good at maths!)


    Aha - "in the coming crash" - another convert!

    1. A property which would

    a. have intrinsic value e.g. well built and plenty of space;

    b. be reasonably easy to re-sell to picky buyers in a difficult market i.e. no obvious flaws such as an awkward layout, undesirable location e.g. on main road or near pub or even on steep slope;

    c. not priced up due to expensive and unnecessary improvements e.g. swimming pools, fancy landscape gardening, elaborate conversions, or even because it is new;

    d. be in an established area with a sense of community (even in an area where few properties change hands, you may find a small enclave - a particular road or block - where they seem to change hands more often for no particular reason!)

    e. have minimal exposure to planning blight - don't pay a premium for living near a park or having a fantastic view if there's a significant risk it could get built on.

    f. be in an area which has not recently suffered a manic speculative boom which bears no relation to the local economy but where prices have typically risen more steadily and already had some falls priced in.

    2. Renting vs Buying costs

    a. Service charge (leasehold properties): owner-occupiers pay this, tenants do not; owners are exposed to risk that this will rise over and above inflation or that demands are made for sinking funds etc;

    b. Buildings insurance (sometimes collected via service charge); owners pay this, tenants do not;

    c. Contents insurance: both owners and tenants are responsible but in a rented furnished property obviously the tenant does not have to pay for the furniture and more importantly, make sure it meets regulations;

    d. Repairs, renewals, redecoration: tenant usually not responsible for costs, including management costs, but on the other hand cannot simply go and redecorate / enhance / personalise the property as they wish;

    e. Lettings agents' fees: tenant will usually incur a fee on each renewal. Inventory costs also have to be factored in;

    f. Council tax and water rates; both tenant and owner-occupiers are responsible but tenant may not always have he option of having a water meter to reduce costs.

    g. Leasehold extensions: Owner-occupiers responsible but not tenants. When leases decline to c. 70 years it often becomes attractive to extend the lease or purchase the freehold. This can literally cost thousands, although of course the property value is not only preserved but usually goes up as a result.

    h. Legal costs (e.g. boundary disputes): owner-occupiers responsible but not tenants.

  5. As for the equity loans 'for all', I believe this was government spin. There was, I understand, double counting of money already set aside for existing schemes, and the 'new schemes' will actually be heavily restricted to certain types of people.

    The proposals don't actually state the criteria by which this select number of FTBs will qualify. Since the whole purpose of the scheme is to "help" people into property ownership, they might at least say who, and why, don't you think?

    I am sure the civil servants who packaged this idea already know how ridiculous it is.


  6. And why the urgency to buy now? Well, I really DO need to move to a bigger property.

    If you honestly feel you can't rent, after your bad experiences, then you might still find other, more cost-effective, ways to buy outside the scheme particularly as you are happy to be in the property for the very long term and have stable employemnt prospects.

    Notably a lot of the key-worker-eligible properties seem to be newbuilds (there is even a dedicated NewBuild HomeBuy scheme) strange, because they command a substantial premium, they depreciate, and they typically have smaller or non-existent gardens.

    Yet according to the HomeBuy proposals, the desire to have more space and a garden are some of the main reasons that people are so keen to own their own homes in the first place!

    The proposals also claim the premium for a newbuild to be only about 10%. I'm sure that a good many of posters on this forum would disagree - myself included. E.g. a 3-bed '60's semi with huge garden sold in 2004 in my area for £182K after a year on the market while tiny newbuild 3-bed semis were on the market for £325K approx (cash buyers only, please).

    Why take a part-share of an expensive property when you might find you could have all of a cheaper one, without all the restrictions?

    As DrBubb said, buy carefully below market. Even in an expensive area, you may well be able to find find a dated, not too done-up older-style house where the owner is prepared to take offers, especially if it is the type of property where a chain-free buyer is unusual.

    You'd be more likely to get the vendor to take offers and also you would not have a supposedly independent valuation imposed on you by the scheme. There would be more scope to ease the financial burden by taking a lodger if you needed to, as well. And the property value would not depreciate by huge amounts in the first few years.

  7. Referring to the new proposals again, it did strike me that a "key worker" might be far better off leaving their eligible employment before entering the part-ownership scheme - then qualifying as an ordinary FTB, depending on what the entry criteria actually turn out to be (they haven't actually been stated).

    I wonder what existing key workers in the scheme will think of FTBs who also qualify for equity loans and subsidies yet can presumably do whatever job they want, if any.

    I think it is scandalously patronising to call them Key Workers anyway.

    Perhaps they're called "key workers" because they're locked in?

  8. Under the new proposals you will have to pay back the equity loan at market value within two years if you leave eligible employment, even if you don't sell or choose to buy them out. (Is this true already, or is it a new restriction)?

    Since you couldn't afford the whole price of the property to start with, there is no guarantee that you would be able to do so in the future, and you'd be exposed to any price rise. Perhaps even in a falling market, the penalty would be prohibitive. Realistically you'd probably have to sell even if you didn't want to.

    There could be all kinds of reasons for leaving eligible employment, not all of which are under your control. You seem fairly happy your public sector job is secure, but it's still a risk.

  9. Pretty certain that in the same way choice statistics have been used, choice quotes from Ed have been used. 

    Exactly, as mentioned earlier, it isn't at all clear where these quotes came from and what else he said to put it in context.

    Still, did we really expect a headline saying "House prices set to plummet by 2-3% by year end, says leading economist" ?

  10. I'd like to see Ed Stansfield's quotes in their full context, since this is pretty much the main evidence the article relies on i.e.

    "There is evidence that prices are falling, but it is happening much more slowly than we were expecting," says Ed Stansfield, property economist at Capital Economics.

    Last year, Capital Economics put its neck on the block, claiming that house prices were overvalued by about 20% and could fall by as much as 7% in 2005.

    "That 7% figure is beginning to look far too gloomy, with a 2-3% fall more likely."

    Anyone know where to find his full article?

    It would be particularly interesting to know whether his original 7% prediction was locally in a particular area (as I seem to recall) or nationally.

    Also interesting is the BBC's mention of "underlying confidence in future prospects"

    - future prospects of what exactly? :D a recession / surge in bankruptcies / spiralling unemployment / rising taxes / retail slowdown ....

  11. we moved into our flat in N16 in March last year, did it through Loot because all the agencies in N16 are robbing, good-for-nothings who will charge you:

    credit check fee

    inventory check fee

    'admin' fee!

    direct debit fee!

    and some other fictitious charge when they do their 6 monthly checkup

    They'll charge for a renewal, and are lazy when it comes to fixing any problems.

    We've renewed with the landlady and not signed a new contract because we shook hands and I'm a person who honours my word (I know there are people who would abuse this situation unfortunately). I don't intend to play any funny games ith her and she knows it. I wish more tenancies were like this, EA don't help this process by being greedy and having unbelievable charges. I hope she doesn't try to sell up :(

    You and she are extremely lucky in being able to rely on trust and goodwill, and I hope nothing goes wrong to spoil it.

    Some people are tempted into using an agency *because* they get on well with their landlord but are shy or not very experienced about negotiations (e.g. over repairs / contract terms / rent increases) and prefer to use an agent as an intermediary in order to avoid the risk of any face-to-face unpleasantness.

    Charging things like inventory fees, credit check fees and agreement preparation fees are fairly standard but often excessive to a greater or lesser degree as other posts on this forum have amply illustrated - and landlords have to pay their share too. But perhaps it doesn't sound so much when split between two parties.

    The problem is that many new tenants a. don't know in advance what costs they're going to incur on renewal; and b. don't know what they're getting for their money.

    E.g. (as in my neighbour's case) a botched agreement which had glaring clerical errors in it, where the landlord didn't have the same version that the tenant had agreed, which has had to be redrafted barely 6 weeks from the end of the tenancy, and where neither was required to initial each page (obvious risks). The eventual cost of the new agreement to both landlord and tenant was almost two-thirds of the disputed rent increase!

    BTW she did stand her ground over the rent and has now signed an agreement to keep it the same for a year and defer the increase.

  12. "otherwise we'll be @ 4.75 for a very long time"

    Just seen him chortle this on 24.

    Cites inflationary pressures in the pipeline.

    To counter all the media attention given to the retail slowdown and falling business confidence, did he give any idea of what those inflationary pressures might be? (e.g. energy costs)?

    It's interesting to see inflation cited as a reason for a rise, rather than US interest rates.

  13. The document barely considers the possibility of a falling housing market, or any other cause of mass repossessions, at all: both it and the supplementary document are largely based on very out-of-date surveys and assumptions about the market and the economy in general, which is one of its main weaknesses.

    But the main document does say that some buyers in the scheme *could* be offered the option to "staircase down" (i.e. reduce their equity) in cases of financial difficulty though it leaves that question open. It stresses that this would be an option, not a right, and that it would be at the discretion of the holder of the remaining equity share (not necessarily the Government) and of the mortgage lender.

    A buyer would have to be in one of the schemes (e.g. a social tenant, or a key worker) for this to be true, not a normal buyer in financial difficulty and facing repossession.

  14. I raised this issue with the ODPM and my M.P. two weeks ago.  His researcher emailed me stating that the matter would be looked into.

    I have just had a reply from the ODPM with the links to the supplementary document. Apparently it only came out yesterday, 6th June.

    Here are the links:


    There is also a press release which came with it:


    Haven't read it yet but I did reply to ask whether the consultation deadline was going to be extended (it's only just over 2 weeks away) in view of the fact that the supplementary doc was not issued over 4 weeks before the response deadline as promised and that even the 4 week promise was arbitrary for something described as "key", i.e. essential, data for the purposes of the consultation.

  15. complain to ARLA, and flat refuse to pay the increased rent, and the ladnlord decides not to re-let to them, then they can demand their fee back....hold your ground, it a surprise at how much agents/landlords are willing to back down.  They realise after all that it is better for the place to be rented than to have a void period.

    Talking of contract renewals, we could have an interesting one coming up.  We are on a 6 months contract, and they said that they will want to do another contract after this one finishes, but that we will have to pay for the credit checks (again!).  At the beginning I said that we were not prepared to do that and that we would be insisting on a roll-over to a statuary periodic tenancy, as is the standard.  It turns out that they need to have a fixed term contract for the cover of their "rent guarantee" scheme.  This scheme means that if a tenant defaults on the rent then the scheme will pay out to the landlord.  So it is a bit like Mortgage Indemnity Guarantee (MIG), we pay but someone else benefits.  We will move if we cannot get a statuary periodic...we'll see if they back down...I expect they probably will.

    Just as in my neighbour's case, you could check whether the lettings agent informed you at the beginning of the first contract that you'd be tied into fixed-term contracts because of the rent guarantee scheme (it sounds as if you weren't) and therefore liable for fees for credit checks upon renewal:


    whether dealing with a landlord or a tenant, an Agent should provide clear information on what costs would be incurred, including any potential future financial liabilities to the agent that are reasonably foreseeable and quantifiable.

    I think a lot of lettings agents seem rather sloppy about this and the end result is that tenants get settled in, then get stung for extra fees upon renewal and tend to pay up because they assume they've somehow agreed to, or are frightened to argue. In your case you may find you have made no contractual commitment whatsoever, even a verbal one, to comply with the rent guarantee scheme and all its associated costs (and restrictions!).

    Well back to my Sold-to-Rant Neighbour, the lettings agents are now blaming the landlord and saying he wanted to proceed and never mentioned a rent increase. Wouldn't surprise me if it all ended up being fudged as a "breakdown in communication".

  16. A near-neighbour of mine STR-ed last year, moved into our block of flats, and has been happily renting, apparently on good terms with the landlords and lettings agency (who is ARLA-registered).

    The lettings agency emailed her, just under 2 months from the end of the first year's tenancy, regarding the renewal. They said they'd talked to the landlords, who wanted to renew the tenancy "as before". No mention of any rent increase, much to her relief. She replied she'd be happy to renew "under the same terms". The renewal paperwork promptly appeared with the original rent figure on it.

    (In the process, she did notice there was an error - her address was wrong! -, went into the agency in person to get this corrected and re-stamped, and signed it).

    The lettings agents charged her approx. £94 for her share of their renewal services and she had to pay this up front. The size of the fee was rather unexpected but given there was no rent increase and no hassle, she paid up, and sat back thinking everything was settled, given the parties' previous very reasonable and businesslike behaviour.

    10 days later she got a call (from the landlord, not the agency) totally out of the blue saying that the contract paperwork had been issued "prematurely". Not only was the tenant's address still wrong in his copy (and the landlord had noticed another clerical error as well) but he wanted a rent increase albeit a modest one. This came as a complete shock to the tenant, who thought everything was sorted out.

    After thinking things over, she phoned up the lettings agency and basically told them she felt the agency should honour the original terms even though the landlord had not signed the renewal, her aguments being:

    1. The agency had categorically said that they had talked to the landlords and that the renewal was "as before".

    2. She had made a point of agreeing "under the same terms" to clarify this.

    3. The renewal paperwork bore this out.

    4. She had paid a substantial fee for the renewal paperwork and did not expect anything less than an accurate, professional, service.

    I can only add that the renewal fee is considerably more than I have paid as a landlord for tenancy renewals in the past, and that she does not have seem to have been informed in advance as to her likely future financial obligations, as the ARLA code of practice stipulates.

    After making various ridiculous excuses, the agency has now taken the line that it was not their responsibility to negotiate the rent - it was down to the landlords and tenant. But perhaps the agency should look at the renewals section of the ARLA FAQ which says "the ARLA Agent will normally negotiate between the parties". She has not had sight of the landlord's Terms and Conditions, but the agency did negotiate the rental for the initial 1-year tenancy and have never advised the tenant of anything different. Indeed many agencies might be unhappy at thinking landlords and tenants were negotiating behind their backs.

    My feeling is the agents should make good the landlord by reducing their monthly commission to him and that the tenant's rent should stay as is. A goodwill gesture of a refund of the renewal fees would also help smooth things over.

    At the end of the day, the agency has charged a professional fee for issuing incorrect and misleading paperwork whether or not the renewal contract is legally binding.

    What is the best way for her to complain about this? Though the main casualty in all of this has been the loss of goodwill and peace of mind and this seems hard to quantify.

  17. Sorry, I don't buy this. Mind you, I'm not buying much at the moment!  :lol:

    The EAs with any sort of business acumen will want to drive prices up.


    They want a Bull market where there is a stampede of buyers on the market. This will only happen when prices are soaring.

    When prices turn downstream psychology turns and EAs start blaming buyers and sellers alike.

    I wonder if we will see commission rates edging up and selling agreements becoming more restrictive (perhaps with extra fees here and there) in order to offset falling prices, falling transaction volumes, and lengthening transaction times with more effort needed to see chains through to completion.

    Provided sales actually go through, an EA would not need property prices to rise if they are making more money per transaction.

  18. I actually know someone who paid £2,000 to go on one of these courses. I think she said it was run by a Julie Fielding or Feldman or something. I was so astounded I didn't know what to say in response.

    "It's money well spent" she said. "In X years time you'll easily make your money back".  :blink:

    I just took a few deep breaths and decided to say very little !!


    Wasn't there a BBC property expert who set up as one of these consultants after having what sounded like the best part of her BTL portfolio repossessed? That isn't the same one is it? :D

  19. Pulled out of an accepted offer, mainly due to looking at this website. It was for an ex council property in sunny Manchester on market for 140k. Now someone else has bought it and I feel a little bit sick. Please convince me I've done the right thing! :(

    I think you've done the wrong thing by feeling a little bit sick, but as far as the property is concerned, keep looking at nethouseprices and see what it actually went for (and other properties in the same area) to get some idea of the trend. If you still really *need* to buy, look positive and see if you can find a better property for the money especially as you presumably have finance in place and are proceedable.

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