Dubai Posted August 9, 2010 Share Posted August 9, 2010 OK, this is the USA, but will the idea reach the UK? ... Here's how the plan works. Say you buy a $300,000 house in a subdivision where the developer is participating in a private transfer fee program and has recorded liens on every lot. When you later sell the property, you will be required to pay a fee of 1% of the price you receive. The money must be disbursed out of the closing proceeds and sent to a trustee representing investors. Those investors fronted cash to the developer in exchange for the right to receive streams of payments for decades as individual houses sell and resell.So, if you buy a house this year for $300,000 and resell it for $325,000 a few years from now, you will owe $3,250 at closing. Even if the house drops in value, you will still owe the 1% fee. And if you refuse to pay it, the deal will not close because a lien has been recorded that runs with the title to the property and mandates that every seller pay. http://www.latimes.com/business/la-fi-harney-20100808,0,1183989.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fbusiness+%28L.A.+Times+-+Business%29 Quote Link to comment Share on other sites More sharing options...
Pick It Down Posted August 9, 2010 Share Posted August 9, 2010 OK, this is the USA, but will the idea reach the UK? ... Here's how the plan works. Say you buy a $300,000 house in a subdivision where the developer is participating in a private transfer fee program and has recorded liens on every lot. When you later sell the property, you will be required to pay a fee of 1% of the price you receive. The money must be disbursed out of the closing proceeds and sent to a trustee representing investors. Those investors fronted cash to the developer in exchange for the right to receive streams of payments for decades as individual houses sell and resell.So, if you buy a house this year for $300,000 and resell it for $325,000 a few years from now, you will owe $3,250 at closing. Even if the house drops in value, you will still owe the 1% fee. And if you refuse to pay it, the deal will not close because a lien has been recorded that runs with the title to the property and mandates that every seller pay. http://www.latimes.com/business/la-fi-harney-20100808,0,1183989.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fbusiness+%28L.A.+Times+-+Business%29 in something resembling English? Quote Link to comment Share on other sites More sharing options...
rxe Posted August 9, 2010 Share Posted August 9, 2010 If it does, it will simply be managed along the same lines as houses/developments with absurd management charges - they end up being cheaper than they otherwise would be. I can't think why an investor would go for this, absolutely no control over future earnings, and you'd be vulnerable to all sorts of scams, such as all of the residents transferring ownership to a trust that rents in perpetuity. Quote Link to comment Share on other sites More sharing options...
Dubai Posted August 9, 2010 Author Share Posted August 9, 2010 (edited) Here's the link (I am still having trouble with my main browser.... I have to use firefox for anything like proper formatting!) http://www.latimes.com/business/realestate/la-fi-harney-20100808,0,7521777.story Edited August 9, 2010 by Dubai Quote Link to comment Share on other sites More sharing options...
South Lorne Posted August 9, 2010 Share Posted August 9, 2010 Here's the link (I am still having trouble with my main browser.... I have to use firefox for anything like proper formatting!) http://www.latimes.com/business/realestate/la-fi-harney-20100808,0,7521777.story ...is the link correct?....my browser opened it as :....... Page Not Found Sorry, the page you requested could not be found. -- The URL link may have changed or expired. You may be able to find what you want by choosing a section from the list of links on this page, viewing our Site Map or by searching for a phrase or name. -- If you copied the link, make sure you have the entire address. -- Older published articles that are no longer available at latimes.com can be found at the Los Angeles Times archive. Searching is free, but there is a fee for downloading the full text of found articles. Thank you for visiting latimes.com. Quote Link to comment Share on other sites More sharing options...
montesquieu Posted August 9, 2010 Share Posted August 9, 2010 Well done. the glorious US of A just re-invented feudalism. Quote Link to comment Share on other sites More sharing options...
Dubai Posted August 9, 2010 Author Share Posted August 9, 2010 ...is the link correct?....my browser opened it as :....... Sorry about that..... the link seems to have some sort of "no follow" code in it! If you're interested in reading the details go to www.latimes.com and type a search for New home sale fee.... it's worth a read. Quote Link to comment Share on other sites More sharing options...
yellerkat Posted August 9, 2010 Share Posted August 9, 2010 Sorry about that..... the link seems to have some sort of "no follow" code in it! If you're interested in reading the details go to www.latimes.com and type a search for New home sale fee.... it's worth a read. LINK HERE. Quote Link to comment Share on other sites More sharing options...
miko Posted August 9, 2010 Share Posted August 9, 2010 This is already happing in England, my dad was going to buy a retiement apartment and they had this 1% clause. They said it went into ongoing maintenance of the block , but i thought that came out of service charges. Quote Link to comment Share on other sites More sharing options...
Dubai Posted August 10, 2010 Author Share Posted August 10, 2010 LINK HERE. Many thanks Yellerkat. I think I have issues with my browser, Safari, so I've switched to Firefox! This is already happing in England, my dad was going to buy a retiement apartment and they had this 1% clause. They said it went into ongoing maintenance of the block , but i thought that came out of service charges. My Mum lives in a retirement apartment, and there is only the service charge (which is a bit of a rip off, methinks!). Having said that it hasn't been sold yet so she may be in for a surprise! Quote Link to comment Share on other sites More sharing options...
miko Posted August 10, 2010 Share Posted August 10, 2010 Many thanks Yellerkat. I think I have issues with my browser, Safari, so I've switched to Firefox! My Mum lives in a retirement apartment, and there is only the service charge (which is a bit of a rip off, methinks!). Having said that it hasn't been sold yet so she may be in for a surprise! Where my dad was going to buy , there was a service charge about £2500 a year, nearly £500 ground rent, and £350 a year for a parking space. Ground rent and parking cost's were fixed but not service charge as they will go up , it was these cost's that put him off. P;us the council tax is on top worked out about £4500 per year for a tiny one bed flat. Quote Link to comment Share on other sites More sharing options...
maxdiver Posted August 10, 2010 Share Posted August 10, 2010 This 1% fee is interesting - you'd expect it to be discounted into the price - but I guess buyers won't. In Aberdeen, where I live; there are a lot of apartment blocks with service charges - typically £100 per month. That put me off the idea of buying one as on a P/E style valuation - this charge should devalue your place by as much as £20k - (depending on how big is your bubble) Instead I live in a scary tenement with grotty stairs with only some lights working. I once advertised for a flatmate and one guy didn't even walk all the way up the stairs - he got half way up and then ran away! there's no such thing as a free lunch. Quote Link to comment Share on other sites More sharing options...
Fool's Gold Posted August 10, 2010 Share Posted August 10, 2010 in something resembling English? Bend Over and Take it. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.