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TheCountOfNowhere

£25K Ftb Carrot

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Just been reading up on the £25K FTB buyer scam.

There's some devil in the detail.

They are saying they will fund it using a bank levvy. Are we back to 100% home loans ( which caused the credit crunch ) backed by the government.

They loan must be paid off after 25 years. The loan is interest free for 5 yearsm then is low interest, I'm not sure but is they loan interest only or capital repayment. If capital it will add 83quid to your monthly mortgage.

If the house price goes up they government gets a pro-rata proportion of the profit ( so it's in the governments interest for prices to go up !!! ).

The maximum loan is 20%...so a 200K starter home ( yikes ) would be a 40K loan.

The whole thing is a disgrace and I feel sorry for anyone buying into this.

It's time people told the banks where to go.

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If you borrow 10% from the government and 10% from the builder, you owe 10% back to each when you sell the property.

So if you buy a slavebox for 100k - borrowing 10k from the government and 10k from the builder.

And then you sell it for 200k, you owe the government 20k and the builder 20k.

(At least that's how I have read it to be).

This gives the government incentive to keep the bubble going, as if they needed any more desire..

As I understand it though, as your slavebox depreciates in value so does your loan since it's a %. That's better than nothing.

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How many house sales were there in the UK last week, is it about 40,000 per month..i.e. 480,000 per year, 10K sales would be about 0.2% of all sales...hardly going to help keep the market going is it.

All it is doing is giving a windfall to the builders if they have to buy new builds.

It probably has a negative impact on the resale market, they've effectively taken 10000 potential first time buyers from that market. :lol:

Edited by TheCountOfNowhere

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Well with the stamp duty breaks for large scale BTL investment - I forsee professionally organised mass BTL crews buying out whole developments without incurring the 5% duty in the future. That won't exactly help FTBers either.

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How many house sales were there in the UK last week, is it about 40,000 per month..i.e. 480,000 per year, 10K sales would be about 0.2% of all sales...hardly going to help keep the market going is it.

All it is doing is giving a windfall to the builders if they have to buy new builds.

It probably has a negative impact on the resale market, they've effectively taken 10000 potential first time buyers from that market. :lol:

It's the death of 10,000 chains. on houses that need a FTB to start them off buying a non new build.

These FTBs are then out of the market and stuck until they can afford to raise the cash to pay the 20% back. So that is the death of 1000's more chains in subsequent years.

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I'd only be tempted to use it to put 25k of what would have been my deposit into something interest-bearing, and pay it back as soon as the 5 year interest free period runs out.

If you think of it as an offset mortgage where you can actually get interest on the offset _as well as_ having it cancel out interest on the mortgage, it sounds ok. If you think ooh, this means i can afford to get on the ladder now.. you're nucking futs.

Of course, the new build sector would never dream of raising the prices on their new houses to get a bit more profit, and assume the FTBs won't care as they won't be paying *yet* will they.. :huh:

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I'd only be tempted to use it to put 25k of what would have been my deposit into something interest-bearing, and pay it back as soon as the 5 year interest free period runs out.

If you think of it as an offset mortgage where you can actually get interest on the offset _as well as_ having it cancel out interest on the mortgage, it sounds ok. If you think ooh, this means i can afford to get on the ladder now.. you're nucking futs.

Of course, the new build sector would never dream of raising the prices on their new houses to get a bit more profit, and assume the FTBs won't care as they won't be paying *yet* will they.. :huh:

:lol::lol: how terribly cynical of you

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Of course, the new build sector would never dream of raising the prices on their new houses to get a bit more profit, and assume the FTBs won't care as they won't be paying *yet* will they.. :huh:

That would be like when the car manufacturers decided to up their prices under the car scrappage scheme.

The thing is people with non new builds should have to reduce their prices to be competitive for FTBs not being subsidised by the house builders and government. Unless people get suckered and take this as a massive buy signal.

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Well with the stamp duty breaks for large scale BTL investment - I forsee professionally organised mass BTL crews buying out whole developments without incurring the 5% duty in the future. That won't exactly help FTBers either.

Where are these large scale BTL investors getting the money ? The only people with money are the banks...i.e. our tax money!!! :lol:

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Just been reading up on the £25K FTB buyer scam.

There's some devil in the detail.

It's time people told the banks where to go.

I posted this on a different thread, sorry to whoever already read it.

http://www.housepricecrash.co.uk/forum/index.php?app=forums&module=post&section=post&do=reply_post&f=22&t=161382&qpid=2937488

I'd want to question the maths behind it.

Builder has the flat on the market for 250k.

Buyer puts up 5% = £12.5k - all they can afford.

Gov puts up 10% = £25k

Builder puts up 10% =£25k (wasn't that called fraud last year??)

So, Builder 'makes' £250k on the sale - £25k loss off settable against tax. What profit are we assuming? 50%? So, presumably they pay corporation tax at 28% - so £35k. Overall a net win for the treasury, albeit only £10k.

However, if the buyer can only acheive a loan+deposit of £125k (assuming 10% deposit), then the builder assumes a £25k loss, and the treasury gets nothing.

FTB on the other hand = ***cked to the tune of 100k + interest - so around £150k

The bank over 25 years @5% would have earned £87k on the £112.5k loan, with a corresponding £25k in corp tax.

On the other hand, by subsidising the scheme and acheiving the £200k loan, they would make £155k, with £43k going to the treasury.

Overall, a massive amount of win for the treasury, just a huge amount of loss for the ftb.

Personally it enrages me on more than one level.

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If you borrow 10% from the government and 10% from the builder, you owe 10% back to each when you sell the property.

So if you buy a slavebox for 100k - borrowing 10k from the government and 10k from the builder.

And then you sell it for 200k, you owe the government 20k and the builder 20k.

(At least that's how I have read it to be).

This gives the government incentive to keep the bubble going, as if they needed any more desire..

As I understand it though, as your slavebox depreciates in value so does your loan since it's a %. That's better than nothing.

Does this mean in the more likely scenario that said new build has to be sold for 50k, the seller has to stump up 5k for the builder and Government for the privelage of being conned?

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Nice comment form Guardian pundit which puts it in a nutshell

But who does this £250m initiative help? If you're a construction company pushing new-build at first-time buyers on low incomes, it will help you shift a few units, without having to lower your price quite as much as you might. The profit goes to the builder, the debt goes to the householder, and the risk is transferred to the taxpayer. It would be better, but still a drop in the ocean, to spend the £250m on building social housing for rent. But that wouldn't involve lending poor people money to buy homes they can't really afford. Sub-prime, I think they call it. And it was stupid enough when prices were on the up.
Edited by oldsport

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It's the death of 10,000 chains. on houses that need a FTB to start them off buying a non new build.

These FTBs are then out of the market and stuck until they can afford to raise the cash to pay the 20% back. So that is the death of 1000's more chains in subsequent years.

It's such a small number of total sales it will make no difference really. It's a sop to pretend they are helping someone. In fact only an idiot would use this scheme. Highly dangerous attempt to encourage FTB into a market they should stay well away from. IT's in the interests of the FTB that prices crash down to sensible levels and that will happen if they just don't buy anaything. Prices are falling and who wants to buy when that's the case unless you are already and owner and the fall of equity is not an issue for you?

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As I understand it though, as your slavebox depreciates in value so does your loan since it's a %. That's better than nothing.

Splendid. Time to flog the slavebox for £1 to a [company|trust] I set up for that purpose. Or the kiddies. Or the neighbours in effectively a swap.

Complexity goes hand in hand with corruption (which is of course why complexity rose at an unprecedented rate under NuLab). I have some hopes of the present lot simplifying tax-and-benefits, but the outlook for property looks like another story.

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  • 312 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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