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king_of_stretham

Help To Buy 'propping Up Housing Market'

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Link to BBC article with the fundamentally staggering quote

"Overall the proportion of sales accounted for by Help to Buy is 40% and on some building sites it is reaching 70%," said Ray Boulger of John Charcol mortgages.

Now two points given this is the equity loan and therefore ends in Wales and Scotland in 2016 are we going to see as much as an 70% reduction in new build houses being started in those locations? And secondly as this is going to carry on in England until 2020 at least (I think it will never be withdrawn unless a radical government comes to power) will we see a greater divergence in english and welsh house prices?

TBH This is a staggering amount of state subsidy to builders, paying this back could be difficult for many and I thinks shows how much control the government can have over housing and prices. Not sure given the Daves new (or perhaps old beefed up) prop relaxing rules around shared ownership, we wont see props continuer for a long time yet.

That said my Mum who is a big HPI accepter (doesn't celebrate HPI but tells me that "they will never let house prices correct because people like your grandma vote") finally said out of the blue that HTB seems a bit of a con!? So understanding of what is going on is starting to get out there.

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At least they've targeted HTB to new builds. It will encourage them to build more, so when the crash comes it will be even the more beautiful.

Less competition for decent housing stock. Drove past ex-BoE Woodford Aerospace/drome today. You can now see a row of newbuilds from the 2nd entrance. Tightly packed typical newbuild design.

On mortgages for regular buyers, noticed this from a broker yesterday, but perhaps he was bigging up broker services vs the banks.

On a Mortgage Day at Christmas the Lender Gave To She!

07-12-2015

So I asked a friend to approach a number of lenders with this scenario. The idea was to get an appointment to speak to a mortgage adviser about a residential mortgage. They were a first time buyer, looking to purchase their first property at £250,000 with a £100,000 deposit.

I can report that at the end of these Christmas numbers there were NO ladies dancing, this one wasn’t even smiling!

The calling birds didn’t answer their phones and instead of Geese swimming she felt like she was sinking!

SEVEN Lenders contacted

FIVE Hours Wasted

NIL appointments offered (2 weeks’ time best offered)

TWO offered call- backs (but didn’t call back)

TWO put her through to a Branch and NOBODY answered (left ringing 15 mins)

THREE didn’t ask if she worked or how much she earned

ONE asked if she was working

TWO asked how she raised a deposit

NIL said they only offered their own mortgages

ONE mentioned Help to Buy and Shared Ownership

.. more http://www.propertytribes.com/on-mortgage-day-christmas-lender-gave-she-t-127622904.html

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Like the rest of Osborne's sociopathic echo bubble props, HtB/FLS rewards gimcrack operators and financial speculators while simultaneously punishing thrift and hard work by devaluing savings and labour.

The builders continue to make easy money even when selling fewer houses, meanwhile the young and unwary are (yet again) seduced into a lifetime of debt servitude in exchange for a jerry-built shitboxes that will need to be scraped off the earth thirty years hence when they're condemned as uninhabitable.

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'So I asked a friend to approach a number of lenders with this scenario. The idea was to get an appointment to speak to a mortgage adviser about a residential mortgage. They were a first time buyer, looking to purchase their first property at £250,000 with a £100,000 deposit.'

Problem is that still leaves a gap of 150k, which assuming Mr + Mrs YoungHomebuyer would need a clear income i.e no loans, childcare,etc, of ~45k.

Most people in their 30s earns ~25-30K and carry debt.

If they have kids then one earns subs 20k.

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What is really depressing about this insane policy is that so many of the young coupes taking it up are so pathetically grateful for the chance to sell their most productive lives to builders of crappy houses and their banks.

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So true and I must be one of those hopefully FTB's as I opened my HTB ISA! :P How I laughed at myself for supporting this crazy system! :lol: Still 4% is 4%!

P.s. Opening a HTB ISA is in no way confirming that I will be buying in the UK! :ph34r:

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help to buy ISA is s step to improving buying power for FTB along with other policies to force BTL to sell.

but seeing that the gap between FTB and BTL is such a joke and the HTB ISA barely makes a dint into helping FTB, it seems safe to assume prices are expected to fall and when it reaches a level FTB can buy they will be the only market not BTL.

Society is set to change to much more owner occupiers. my only worry is that maybe labour want more renters? to support them.

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Some new flats being built in Luton 2 beds are 148 around 2 miles away in Dunstable some new 2 beds flats 178 to 189 ..now guess which set you can use HTB to purchase ..HTB is a massive , massive con it's just allowed developers to up the prices with part of it deferred.The genius being that the loan is always a % of the home so even with HPI it just means you will owe more ..

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The article looks like a companion to today's commentary in "you and yours", which put out those numbers in two short sections on HTB. Included commentary from people hostile to it, as well as one feeble apologist for it at the end.

Edited by porca misèria

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Each new build soaks away interest for actually well built older houses. If feckless buyers want to buy instant negative equity it's their own fault.

the kind of people to only care about new pretty interiors are not really the kind of people to have enough intellectual depth to understand how poor a financial decision new builds are.

but like new car buyers, someone has to take the hit. I will buy the apericating classics!

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Some new flats being built in Luton 2 beds are 148 around 2 miles away in Dunstable some new 2 beds flats 178 to 189 ..now guess which set you can use HTB to purchase ..HTB is a massive , massive con it's just allowed developers to up the prices with part of it deferred.The genius being that the loan is always a % of the home so even with HPI it just means you will owe more ..

Is that true?

If I take out the 40% London HTB for say 150k, and house prices rise 10%, I then owe the government 165k? And then if they rise another 10% I owe 181.5k?

When are you meant to pay off the debt? And how is the 'housing ladder' supposed to work - even if house prices rise and you get free equity, it'll be cancelled out by the increased amount you owe?

Are there really buyers out there sincerely grateful for this 'help'? You'd have to be mad, or utterly desperate.

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No. Assume 5% is yours + 20% borrowed from HTB + 75% borrowed from bank.

So, you paid 7.5k yourself, borrowed 30k on HTB and 112.5k from the bank.

On sale with 10% rise, you return 33k to the government and 112.5k to the bank.

Your profit = 165 - 33 - 112.5- 7.5 = 12k out of maximum possible 15k

Not sure if this is right or what would happen if prices fell!

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Is that true?

If I take out the 40% London HTB for say 150k, and house prices rise 10%, I then owe the government 165k? And then if they rise another 10% I owe 181.5k?

When are you meant to pay off the debt? And how is the 'housing ladder' supposed to work - even if house prices rise and you get free equity, it'll be cancelled out by the increased amount you owe?

Are there really buyers out there sincerely grateful for this 'help'? You'd have to be mad, or utterly desperate.

It's very much true and the thing I think alot of people are missing !! It's a stich up

http://www.helptobuymidlands.co.uk/faqs-help-to-buy---equity-loan

Equity Loans are linked to the value of your home, so if its value goes up, the amount you pay back goes up by the same percentage. So, if your property originally cost £200,000 and then goes up in value by 10%, the amount you pay back would also go up by 10%. For example:

  • Your home costs £200,000 when you buy it
  • You have a 20% equity loan of £40,000
  • Your home is worth £250,000 when you sell it, (or redeem your loan)
  • You pay back 20% of £250,000 which is £50,000

Also remember from year 6 you have to pay the fee's on the loan even if you don't actually make payments on the loan

You will not have to pay any interest or fees on your equity loan for the first five years after purchase. From year 6 fees of 1.75% will be levied. These fees increase by RPI + 1% every year

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So true and I must be one of those hopefully FTB's as I opened my HTB ISA! :P How I laughed at myself for supporting this crazy system! :lol: Still 4% is 4%!

P.s. Opening a HTB ISA is in no way confirming that I will be buying in the UK! :ph34r:

Nationwide are offering 5% on a variation of the flexaccount at the moment.. ;)

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No. Assume 5% is yours + 20% borrowed from HTB + 75% borrowed from bank.

So, you paid 7.5k yourself, borrowed 30k on HTB and 112.5k from the bank.

On sale with 10% rise, you return 33k to the government and 112.5k to the bank.

Your profit = 165 - 33 - 112.5- 7.5 = 12k out of maximum possible 15k

Not sure if this is right or what would happen if prices fell!

What about mortgage interest on the bank's 112.5k?

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What about mortgage interest on the bank's 112.5k?

My response was addressing other posts suggesting that HTB repayment balance increases by total increase in price, when it actually increases in proportion with price. Ignoring mortgage interest and additional fees etc.

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I gave various Help To Buy efforts some further thought and decided that in my case, they may actually have short-term and small but very deflationary side-effect. Given that full potential of HTB ISA only matures in a few years and there are some clear efforts to reduce profitability of BTL, I now have hope of buying a house in the future at a price which may be reasonable.

As a result, I am now saving money by sharing my current rented accommodation which I previously (sometimes) occupied by myself. Net result - less money for BTL landlords in my town as my housemates is not renting additional rooms elsewhere.

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A friend's daughter and her husband put an offer in on a non new build  house last week but were refused a mortgage due to a couple of bad debts, her husband had with his previous wife. The mortgage broker has told them they will have no problem getting a mortgage if they use the Help to Buy Bail Banks scheme on a new build. Even though after the 20% equity loan, their mortgage amount is going to be more than the mortgage they were refused. It seems to imply lending standards are lax using Help to Buy Bail Banks. No surprise when banks know it's taxpayer's, not them, that are on the hook for the 20% equity loan? 

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On 09/12/2015 at 1:46 PM, king_of_stretham said:

Link to BBC article with the fundamentally staggering quote

"Overall the proportion of sales accounted for by Help to Buy is 40% and on some building sites it is reaching 70%," said Ray Boulger of John Charcol mortgages.

Now two points given this is the equity loan and therefore ends in Wales and Scotland in 2016 are we going to see as much as an 70% reduction in new build houses being started in those locations? And secondly as this is going to carry on in England until 2020 at least (I think it will never be withdrawn unless a radical government comes to power) will we see a greater divergence in english and welsh house prices?

TBH This is a staggering amount of state subsidy to builders, paying this back could be difficult for many and I thinks shows how much control the government can have over housing and prices. Not sure given the Daves new (or perhaps old beefed up) prop relaxing rules around shared ownership, we wont see props continuer for a long time yet.

That said my Mum who is a big HPI accepter (doesn't celebrate HPI but tells me that "they will never let house prices correct because people like your grandma vote") finally said out of the blue that HTB seems a bit of a con!? So understanding of what is going on is starting to get out there.

Persimmon managers took a 600million dividend....why people are not building gallows is beyond me 

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7 hours ago, Democorruptcy said:

A friend's daughter and her husband put an offer in on a non new build  house last week but were refused a mortgage due to a couple of bad debts, her husband had with his previous wife. The mortgage broker has told them they will have no problem getting a mortgage if they use the Help to Buy Bail Banks scheme on a new build. Even though after the 20% equity loan, their mortgage amount is going to be more than the mortgage they were refused. It seems to imply lending standards are lax using Help to Buy Bail Banks. No surprise when banks know it's taxpayer's, not them, that are on the hook for the 20% equity loan? 

New buils s loose 20% the day you move in.

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Half the southeastern corner of Edinburgh is packed with new builds and more sites going under construction over the next few years. HTB ceiling price comes down in 3 stages in Scotland, so it will be interesting to see what impact that has on asking prices.

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