New Build - Move In For 75%......

[GWLD]

Apologies if this is old hat and has already been reported.

In Metro (London) today, not seen this one before, "pay 75% now! The deferred amount is paid back as 25% of the property's market value any time up to the resale or within 10 years, whichever is sooner"

A structure such as this not uncommon in company M&A activity, but I suspect a first in residential housing. It is clearly stated that this is not a shared ownership scheme and the property is 100% owned by the purchaser. The property is River Heights, Purfleet, Essex, purchase price £134,996 (75%).

I thought it was interesting and worth sharing.

[AgeingBabyBoomer]

So what they are saying is the flat is currently only worth 75% of the current asking price

but justified on the promise of 25% inflation in the next 10 years, they expect you to pay an

assumed gain back to them.

If prices don't rise 25% in the next ten years, you lose

What a deal indeed

ABB

[GWLD]

So what they are saying is the flat is currently only worth 75% of the current asking price

but justified on the promise of 25% inflation in the next 10 years, they expect you to pay an

assumed gain back to them.

If prices don't rise 25% in the next ten years, you lose

What a deal indeed

ABB

<{POST_SNAPBACK}>

Exactly, an exceptionally bad deal, however the initial impact for the poor sod who reads it is "wow, what a great deal, and I can park any further payments for 10 years... making it presently more affordable". I for one do not have any faith in "joe the public" mental capacity to understand the risks and many I suspect would look at it as a good deal, more fool them.

For the avoidance of doubt, I would not touch it with a barge pole!

What it also shows to me, is the shear desperation of the seller to shift stock, clearly because nobody is buying and they must shift stock! You are right to bring up inflation, which may have a significant impact on the deferred payment or not, which let's face it, we all have little idea about the effect of inflation over the stated timescale.

[Chris....]

Lets not forget that even 75% up front will give the developer a healthy profit, and capital to move on to the next deal.

[right_freds_dead]

seems no-one is taking up this 'fantastic' offer.

go to your employers and ask them to cough up the next 10 years projected earnings up front. see how far you get.

[Michael]

Apologies if this is old hat and has already been reported.

In Metro (London) today, not seen this one before, "pay 75% now!  The deferred amount is paid back as 25% of the property's market value any time up to the resale or within 10 years, whichever is sooner"

A structure such as this not uncommon in company M&A activity, but I suspect a first in residential housing.  It is clearly stated that this is not a shared ownership scheme and the property is 100% owned by the purchaser.  The property is River Heights, Purfleet, Essex, purchase price £134,996 (75%).

I thought it was interesting and worth sharing.

<{POST_SNAPBACK}>

Such schemes remind me of part exchanges which were widespread in the last slump..........

Sounds too good to be true but the catch is that the full amount you pay (£180,000) is a current over-hyped asking price!...........probably 10% above what you could negotiate most sellers down to in this market.......and 20 or 30 % above what the property will be likely to be worth in 5 years' time.......

So although the builder is lending you £45000 interest free for 10 years years...(an apparent gift of about £20000).....it's against an over-priced asset...

However you could see it as a de facto £20k or 11% price cut!'......and most people out there would see this is as a bargain.....but it begs the question..why not just knock 11% off the asking price rather than going round the houses with a scheme like this???????

Edited August 13, 2005 by Michael

[deano]

These deals are being offered down south as well. They can't get what they want for them, that being last years prices. They will destort the figures going to land reg as well because an apartment sold for £150,000 will show up as being sold for £200,000 which it clearly has not. They are trying it on and when it goes wrong the deal will get bad press.