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Running Bear

Anecdote - Father Nearly Sucked In

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I have a personal anecdote for you all.

I was chatting to my father on the phone, he indicated that he is thinking of buying a 2 bed flat.

For 100k, in manchester.

Yes you read that right, 100k in manchester.

Anyway, after a 1hr rant at him on the foolishness of such a decision, it emerges that the builders have a deal going whereby the flats are worth 100k but you only have to buy half of it for 50k and the developers retain a 50% ownership of the property, which of course will be reimbursed when you sell.

Clearly the reasons for this are because in the council estate dominated area of manchester where my father lives, no-one can muster a 100k mortgage. Average incomes are ~17-20K for the better jobs.

I showed him on nethouseprices.net how earlier builds of these flats from 2002 originally sold for 49.9k and how clearly they cannot be worth more than 65-70k now (and that is my top end valuation).

It makes my blood boil.

To cap it all, he (by fate of circumstance, not concious decision) is an str and is sitting with his partner on a 50k stash.

He is living accross the road in one of the previous builds and paying only 400 a month, which although expensive to me, is more or less half paid for by the interest from his stash.

I have put him onto HPC and am explaining to him that in 2 years he can buy it outright for prob 70 max.

This really angers me, these builders that prey on the dumb, over optomistic and old, are on an equal moral footing with the alarm/security salesmen that turn up at old peoples houses with a photo album of old folk who have been beaten up/raped/murdered in their own homes to help sell their overpriced ineffective alarms.

spelling & grammar back cos am ranting.

End rant

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good stuff

in no other purchase transaction would people accept such price increases without there being a substantial improvement in what they are buying( eg quality of work or a bigger house, bigger garden.)

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I have a personal anecdote for you all.

I was chatting to my father on the phone, he indicated that he is thinking of buying a 2 bed flat.

. . .

Running Bear,

You know your family better than I, so don't get me wrong I could be totally barking up the wrong tree, but I can think of a couple of reasons why this 50% buy might not be such a bad decision. Even if the flat looks a bit overpriced.

(But I do agree if you have good reason to believe prices will drop by 30% then don't go near the deal unless you can get 50% for 40K or so!!)

1. If either your father or his partner get 'burning pocket' syndrome when they have money, then using the 50K to buy the share of the flat will remove the temptation to spend it unwisely.

I speak from experience here, as I have just helplessly observed an intellectually disabled acquaintance spend his way through a small legacy (despite my repeated warnings) and the poor b****r's now back to destitute and getting dunning phone calls from credit card companies again.

2. If your father uses his 50K to pay cash for the share of the flat, then he won't have any repayments or rent, just the ownership costs. On an after tax basis he might be better off than he is collecting interest and paying rent.

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  • 338 Brexit, House prices and Summer 2020

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      • down 5% +
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