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Bank of Granny and Granddad: One in ten young people turn to grandparents for help with house deposit, report finds

http://www.dailymail.co.uk/news/article-2092424/Bank-Granny-Granddad-One-young-people-turn-grandparents-help-house-deposit.html

Parents did not have the spare funds to help their children, with many saying that they were struggling enough to keep themselves afloat.

It also reveals the impact on grown-up children forced to live at home as they save to buy their first property.

The majority said that their relationship with their parents had suffered, with some fearing they will have to stay at home into their late 40s or early 50s, according to the research, from the housebuilder Taylor Wimpey.

Other experts warned recently that millions of young people may never be able to buy their own home, or will have to wait years before it is possible

Paul Smee, of the Council of Mortgage Lenders, said many will be forced to spend far longer renting than they had ever imagined and that home ownership was an ‘unrealistic assumption’ for many people.

Another report, published today by HSBC, warned Britain is facing a ‘housing stagnation’ this year, partly fuelled by the large number of young people who cannot buy.

Under-34s said they could not get on to the property ladder because they are unable to raise a deposit, were fearful about their ability to get a mortgage and worried about job security.

In a sign of the anxiety, a Bank of England report this week said many property sales are falling through as one or more buyers in the chain lose their nerve. It claimed this is linked to ‘concerns about the economic outlook’.

High property prices mean the number of young people who manage to buy without help has collapsed, according to the Council of Mortgage Lenders.

In 2005, 69 per cent of first-time buyers bought their home without any financial help, compared with 35 per cent today.

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UK. Thanks to Timebandit on main Forum - http://www.housepricecrash.co.uk/forum/index.php?showtopic=174471

Who really gets government subsidised housing?

Official figures show government spends more money on supporting owner-occupiers than social tenants

http://www.guardian.co.uk/housing-network/2012/jan/27/government-subsidised-social-housing-rent

Let's start with the sector that's really cushioned by the government – that's owner-occupiers, especially those who have paid off their mortgages. Of course, significant benefits to mortgage payers were wiped out when tax relief was cut by Margaret Thatcher's government and eventually ended 12 years ago. But all owners still enjoy capital gains tax relief, currently worth almost £6bn.

Those with no or only small mortgages also benefit from not being taxed on the value of their home (as used to happen through the old schedule A tax). This tax relief is now valued at over £11bn. Pooling these benefits and adding back in the stamp duty and inheritance tax of approximately £5bn that owners do pay, the net subsidy received is still a surprising £12bn per year.

Of course it's true that no government is likely to restore schedule A tax, but even disregarding it the outcome is that owners pay no net tax at all (council tax doesn't count as tenants pay it too). As Professor Steve Wilcox points out, the existence of these tax advantages means that house prices are far higher than they might otherwise be, benefitting existing owners at the expense of those struggling to enter the market.

Owners in difficulty also receive support with mortgage payments. All governments have provided subsidy to shared ownership, as a first step on the ladder, and about 170,000 homes have been built on this basis alone. The biggest subsidy of all (for the individual households who have benefitted) has been the right-to-buy, offering 2m buyers a typical discount of £26,000. The UK Housing Review gives the total value of these subsidies as £1.6bn for the year 2009/10 – and in the recent past they have been even higher.

Private landlords don't enjoy the same tax advantages as owner-occupiers. However, the recent growth in the market for landlords who own only one or two properties is fuelled by homeowners who can afford the deposit to buy another house simply to rent out. Landlords also find it much easier to get interest-only mortgages.

Let's turn to subsidy for renting. All tenants are eligible for housing benefit. The average benefit payment for private tenants, at £114 per week in England, compares with £82 for housing association tenants and £73 for council tenants.

Osborne has also made it clear many times that low interest rates are needed for 'mortgagees' - govt policy but BOE responsibility (currently)

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Mortgage rates to be volatile, say brokers

http://www.bbc.co.uk/news/business-16758014

In recent days, some of the major lenders have increased their mortgage rates by up to 0.3 percentage points.

Others have changed the loan-to-value bands, so borrowers might not always get a cheaper deal by offering a larger deposit.

Long-term costs for lenders have risen, he said, owing to uncertainty as a result of the crisis.

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Mortgage rates to be volatile, say brokers

http://www.bbc.co.uk/news/business-16758014

In recent days, some of the major lenders have increased their mortgage rates by up to 0.3 percentage points.

Others have changed the loan-to-value bands, so borrowers might not always get a cheaper deal by offering a larger deposit.

Long-term costs for lenders have risen, he said, owing to uncertainty as a result of the crisis.

2 year discount deal at HSBC for FTB of just under 4% (could be 3.89) fixed for 2 years for only 10% deposit

went to see a house yesterday that was sale agreedlast week for a few days. owner said couple said they could get a 100% mortgage which they then werent able to get :blink: . why would they even think a 100% mortgage was possible and why go looking at houses if you have no deposit, some peple are just daft or plain thick

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2 year discount deal at HSBC for FTB of just under 4% (could be 3.89) fixed for 2 years for only 10% deposit

went to see a house yesterday that was sale agreedlast week for a few days. owner said couple said they could get a 100% mortgage which they then werent able to get :blink: . why would they even think a 100% mortgage was possible and why go looking at houses if you have no deposit, some peple are just daft or plain thick

Because that's the way things were.

And the Northern does 100%. And Co ownership is specifically for those that can't afford the house - and they must be able to prove that they can't afford it. That's the reality.

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Because that's the way things were.

And the Northern does 100%. And Co ownership is specifically for those that can't afford the house - and they must be able to prove that they can't afford it. That's the reality.

Northern always claimed they did 100% (why I don't know). Turns out you only got this loan if you could prove you could buy the house without the mortgage. I few they did actually do were backed by parent gurantees. Thankfully they have now dropped it.

For Co-ownership, I believe you still need a deposit and a mortgage. the Co-ownership co. buys half the house with you and rents that half to you ar a very low rate.

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Northern always claimed they did 100% (why I don't know). Turns out you only got this loan if you could prove you could buy the house without the mortgage. I few they did actually do were backed by parent gurantees. Thankfully they have now dropped it.

For Co-ownership, I believe you still need a deposit and a mortgage. the Co-ownership co. buys half the house with you and rents that half to you ar a very low rate.

Can't find the 100% on the Northern website. It's either been pulled or is not advertised. And you can't be a little bit pregnant - either they offer them (which they did) or they don't. They do seem to do a lot of 95% stuff though and fees seem to be around the £1,000 mark.

The co ownership rents at 2.5% (in addition to the mortgaged portion), not much different from the best mortgages currently available, and hardly a very low rate when using that as a comparison. So if you can afford that, why do you need co ownership?

Wonder when they'll reduce the £175k limit and what difficulties (specifically rent collection) they are having in the current economic climate, given their very specific target demographic. And who pays, in the end, for the bad debts?

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Can't find the 100% on the Northern website. It's either been pulled or is not advertised. And you can't be a little bit pregnant - either they offer them (which they did) or they don't. They do seem to do a lot of 95% stuff though and fees seem to be around the £1,000 mark.

The co ownership rents at 2.5% (in addition to the mortgaged portion), not much different from the best mortgages currently available, and hardly a very low rate when using that as a comparison. So if you can afford that, why do you need co ownership?

Wonder when they'll reduce the £175k limit and what difficulties (specifically rent collection) they are having in the current economic climate, given their very specific target demographic. And who pays, in the end, for the bad debts?

I did say in my post that the "Thankfully they have now dropped it", so it wont be on their website. The only people who will use Co-ownership are people who, as you say can afford it, but cant get a mortgage. Therefore instead of renting the whole house they take the option of buying half, or more of the house and renting the other half, or less at a rate that is substantially lower than market rent. Quite often they find that the combined mortgage and rent is lower than renting the building.

Why do we need co-ownership? Because the banks and mortgage houses, who fell over themselves to give out loan when property was twice the price it is now are not lending, when the same houses are now half the price, to people with small deposits. CO-Ownership fills that void and does it in a way that doesn't cost the taxpayer in the long run.

Their average purchase price is £125k. I asked them why they have the seemly high upper limit. They informed me there are times when they want to assist a large family to purchase a house is an area where large houses can cost that amount. My personal view on that would perhaps be very close to most here but having an upper limit and getting anywhere near it are two different things.

I have no idea on the issues they have with rent collection or what they do about it. Im sure it is similar to the issues the HE or the Housing Associations or private LandLords are having and always had.

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I did say in my post that the "Thankfully they have now dropped it", so it wont be on their website. The only people who will use Co-ownership are people who, as you say can afford it, but cant get a mortgage. Therefore instead of renting the whole house they take the option of buying half, or more of the house and renting the other half, or less at a rate that is substantially lower than market rent. Quite often they find that the combined mortgage and rent is lower than renting the building.

Why do we need co-ownership? Because the banks and mortgage houses, who fell over themselves to give out loan when property was twice the price it is now are not lending, when the same houses are now half the price, to people with small deposits. CO-Ownership fills that void and does it in a way that doesn't cost the taxpayer in the long run.

I have no idea on the issues they have with rent collection or what they do about it. Im sure it is similar to the issues the HE or the Housing Associations or private LandLords are having and always had.

Co ownership are a housing association, or at least were. The point being none of these people, by definition, will be on HB and may be at a higher risk of default than others, simply because of the criteria used and demographics eg less well paid or secure employment, not entertained by the banks etc. etc.. I don't know.

But I would like to see the success rate and good news stories from this (and I am sure there many) alongside the cost to the taxpayer when things don't work out (and indeed, to administer) - a sort of cost benefit analysis if you will. As a matter of interest.

Quite a few who bought up to the limit of £225k, when it was oversubscribed and draws had to take place, must be concerned now (like many in the wider population who bought in the past 6 yrs or so). Perhaps renting, with hindsight, would have been a better option.

I get the impression it is not oversubscribed at present, which may tell it's own story.

You were right about the Northern - I must pay more attention - pulled, it would appear, in the last 6 months or so. I would agree it was probably a rare beast in any event, but it made a great headline. 95% is still cutting it fine though, in my humble opinion, given current circumstances.

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Most co-ownership users (vast majority) are young low paid, no saving, have debt and buy in Belfast.

I don't see how it doesn't cost the tax payer in the long run. If there was no commercial ris the banks would provide all the funding via one of their products. Instead we have a product funded by tax payer’s money, given to those who can't manager their finances. The only bank to offer the mortgage is a tax payer owned one.

The scheme looks to be running at a significant loss with high operating costs.

Not very well thought out IMPO.

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Most co-ownership users (vast majority) are young low paid, no saving, have debt and buy in Belfast.

I don't see how it doesn't cost the tax payer in the long run. If there was no commercial ris the banks would provide all the funding via one of their products. Instead we have a product funded by tax payer’s money, given to those who can't manager their finances. The only bank to offer the mortgage is a tax payer owned one.

The scheme looks to be running at a significant loss with high operating costs.

Not very well thought out IMPO.

I am not sure but I imagine if you have existing debt you would be excluded. It hasnt cost the tax payer in the long run and all money that the tax payer invested is recirculated and paid back. I have to smile at your comment about the bank lending if there was no risk. We have seen how the banks lent money, when houses were twice the price they are now with little or no regard to any risk. Now, when the houses are half the price, twice as affordable they dont lend. It has more to do with availability of funds than any risk analysis.

I think it is unfair to clasify those who use Co-ownership as people who cannot manage their financial affairs. I dont believe Co-ownership would accept those applicants. The truth is there are people caught in that income bracket that leaves home ownership out of reach. At the moment mortgages are offered mainly to the wealthy half of the population. As prices fall people may find that ownership is cheaper than renting. Have shown that they can affort the , in some cases more expensive rent however are not offered a mortgage. Co-ownership is the best option for them.

The taxpayers bank takes up to 60% of mortgages in NI. I understand the Northern is soon to join them on the Co-ownership list.

Co-ownership has reserves of £100m and paid back to the Gov over £2m in 2010.

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Oh and that the 50 staff members received a pay increase last year of 5.8% and pension increase of nearly 4%.

Seems it's not just the farmers doing well.

This scheme costs a MASSIVE amount of money. This IS NOT good value for the tax payer.

They refund all the Grant money. How much better value can you get.

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I am not sure but I imagine if you have existing debt you would be excluded. It hasnt cost the tax payer in the long run and all money that the tax payer invested is recirculated and paid back. I have to smile at your comment about the bank lending if there was no risk. We have seen how the banks lent money, when houses were twice the price they are now with little or no regard to any risk. Now, when the houses are half the price, twice as affordable they dont lend. It has more to do with availability of funds than any risk analysis.

I think it is unfair to clasify those who use Co-ownership as people who cannot manage their financial affairs. I dont believe Co-ownership would accept those applicants. The truth is there are people caught in that income bracket that leaves home ownership out of reach. At the moment mortgages are offered mainly to the wealthy half of the population. As prices fall people may find that ownership is cheaper than renting. Have shown that they can affort the , in some cases more expensive rent however are not offered a mortgage. Co-ownership is the best option for them.

The taxpayers bank takes up to 60% of mortgages in NI. I understand the Northern is soon to join them on the Co-ownership list.

Co-ownership has reserves of £100m and paid back to the Gov over £2m in 2010.

Co-ownership made a LOSS of £3 million last year. Reserves in what form, cash reserves?

I can't get this "it hasn't cost the tax payer in the long run". Obviously as their "shares" are counted as assets we wouldn't know how much it (the sheme) "costs" until all shares were sold at whatever market value at the time. Last year there was a write-down. Add the running costs (staff, professional fess, pensions etc.) and this programme has cost the tax pay a substantial amount of money. And contimues to do so.

The money the from DSD isn’t just given to “buy” houses. It covers the cost of running the scheme.

At the end of the day who really benefits from this? We the tax payers give a loan to buy the house; we lose out if it decreases in value. The purchaser losses out if it falls in value with negative equity having bought a house at a time where schemes like this prop up an otherwise dead market.

This helps developers off loads houses they otherwise couldn't. The banks spread the risk with what is in effect a 50% deposit.

edit - using my new android phone.

Edited by 2buyornot2buy
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I have to smile at your comment about the bank lending if there was no risk. We have seen how the banks lent money, when houses were twice the price they are now with little or no regard to any risk. Now, when the houses are half the price, twice as affordable they dont lend. It has more to do with availability of funds than any risk analysis.

I take your point on this, but this has turned into a cleshay for me ... a bit like the good old blamethrower game IMO. I don't agree that it is ALL about availability of funds, maybe for some banks but not all. The FSA have put a massive onus on Banks balancing their books and for those who lent out money they didnt have it to lend in the first place then yes I agree, they dont have any money to lend. But I have made the point before that while there are no longer hundreds of MTG offers available there remain plenty of Banks that do have money available to lend for MTG's and are not because they have learned from their mistakes (and losses) of the boom years and have defaulted back to normal affordability rules ... which still prevent many from purchasing a house given that they cant prove affordability for the loan ... even at 50% of peak prices.

The taxpayers bank takes up to 60% of mortgages in NI. I understand the Northern is soon to join them on the Co-ownership list.

Co-ownership has reserves of £100m and paid back to the Gov over £2m in 2010.

I havent read any of the earlier posts on this and dont know that much about co-ownership, but from what I am hearing the government are leaning heavily on local banks to offer co-ownership. Whether this becomes a paper/political exercise or not remains to be seen. I wouldn't hold my breath on too many being approved if this is the case.

Edited by tinbin
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Co-ownership made a LOSS of £3 million last year. Reserves in what form, cash reserves?

I can't get this "it hasn't cost the tax payer in the long run". Obviously as their "shares" are counted as assets we wouldn't know how much it (the sheme) "costs" until all shares were sold at whatever market value at the time. Last year there was a write-down. Add the running costs (staff, professional fess, pensions etc.) and this programme has cost the tax pay a substantial amount of money. And contimues to do so.

The money the from DSD isn’t just given to “buy” houses. It covers the cost of running the scheme.

At the end of the day who really benefits from this? We the tax payers give a loan to buy the house; we lose out if it decreases in value. The purchaser losses out if it falls in value with negative equity having bought a house at a time where schemes like this prop up an otherwise dead market.

This helps developers off loads houses they otherwise couldn't. The banks spread the risk with what is in effect a 50% deposit.

edit - using my new android phone.

Hope you like your new phone.

I don't want to sound like an advertisement for Co-Ownership. Its not the answer to everything but it has its role.

The people who turn to co-ownership would either be 'propping up the rental market or falling on Social housing if Co-ownership was not there. It is substantially cheaper for the state to house someone through social housing than through scarce and expensive social housing. As the state gets all its money returned it is extremely good value. Co-ownership has assisted over 21,000 householders since 1978. Many of those people have stair cased up to total ownership and others have sold on and moved into other houses returning funds to co-ownership, who in-turn returned them to the government. (they are not allowed to recycle funds and have to return and re-apply each year).

The quota was limited to 50 per month last year, when there was 150 applicants per month. However it has now secured, what it believes is sufficient funding for the next three years and the quota can be removed.

Total management costs, including depreciation was £2.2m for 2010 for managing £200m of housing stock (1.1%). I don't know what the proper overhead % should be but we could look at the overhead rate of the Housing Executive or other Housing Associations.

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  • 429 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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