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Help to buy - Why not?

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This is a hot topic at the moment so I'd be interested to hear the answer

Who does HTB benefit (apart from builders)?

Are people using the HTB scheme taking part in something that is actually useful to them?

Has anyone looked at the small print to see what the advantages and disadvantages are for buyers?

I'm not talking about society as a whole or political parties but the scheme as a good or bad thing for the people using it. All the houses I have seen offering this scheme have been vastly over-priced, small new builds. 

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My only experience of HTB is second hand information within the north west. Put simply it allows people to buy a house they couldnt otherwise afford because the bank would not lend that much money too them, or without the required percentage of deposit  they wouldnt get the best rates. 

For example a couple who have scraped together 10 grand would probably only be able to afford a terrace between between 90 and 100 grand where i am. With help to buy they can get a four bed semi(small rooms i grant you) driveway, bit of back garden, everything brand new on a brand new estate where everybody is like them. 

From my perspective i live in a terrace house and prefer them to modern new builds on estates, but each to their own. 

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2 hours ago, nothernsoul said:

My only experience of HTB is second hand information within the north west. Put simply it allows people to buy a house they couldnt otherwise afford because the bank would not lend that much money too them, or without the required percentage of deposit  they wouldnt get the best rates. 

For example a couple who have scraped together 10 grand would probably only be able to afford a terrace between between 90 and 100 grand where i am. With help to buy they can get a four bed semi(small rooms i grant you) driveway, bit of back garden, everything brand new on a brand new estate where everybody is like them. 

From my perspective i live in a terrace house and prefer them to modern new builds on estates, but each to their own. 

yes lending to those that otherwise wouldn't be able to borrow ....ie sub prime lending...

This is more money chasing restricted supply = higher prices.  Great news for the house builders (look at their profits and share prices) and the land and property owning wealthy who always are on the winning side and benefit from the outcome of policy despite whatever nonsense is stated as the intention of the policy.

Any first time buyer in their right mind would prefer to see prices correct naturally and then pay that more reasonable lower price rather than see more preposterous schemes by the government designed to distort the market further.  Such distortions always have nasty outcomes...in this case I expect for everyone including those duped into signing up to this cynical scheme.

Be in no doubt that intended audience for the announcement of another £10bill into this scheme was not the young....the audience was the over 50s, home owning wealthy who are vaguely concerned that their children are struggling to buy their own home as they did (or they have heard that some families can't even afford to pay the deposits for the their children)...well guess what ...?  The Conservatives have come up with a neat little scheme that allows the young to 'get on the housing ladder' AND inflate house prices at the same time ...BINGO.!  All is well in the world.

Even better...who pays the £10bill...?  well certainly not those that benefit from the increased house prices and the increase builder profits...no... the people that pay will be the tax payer and they more proportionately are made up of younger people...many of them renters who will see prices extend further out of reach and its their tax money driving this...or an even happier thought is that much of this money is borrowed and added to the national debt and will be paid back by those that have no say at all - children and the unborn...in the future.

In summary - rotten to the core like much of modern British politics.

 

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A very first set of questions on HTB... If these so called young people cannot afford 10% Deposit then:

1. How will they pay the Balance 95% post HTB?

2. How will they manage higher Interest Rates on Current Prices ?

3. How will they manage Recessions with this level of borrowing?

And Finally: WHY THE FK IS THIS GOVERNMENT HELL BENT ON CREATING DEMAND OF HOUSING WITHOUT CREATING SUPPLY? ARE THEIR BACKERS BENEFITING FROM THIS BUBBLE?

 

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Check the fine print and don't expect EAs or solicitors to know all the details. From talking to a guy at work who was selling to pay off the HTB component, it seems that HTB is a share of the property, which goes up or down with the property price valuation, which can be different to the price any mug buyer has offered you. To get out and pay back the HTB loan requires a special valuation report from a gov't approved agent (for an extra fee, £200 maybe?) to assess the new HTB 'share' value. This process can be a real pain to setup when trying to schedule with a sale, also there is a time limit on the valuation report info (3 months I think), which is not good if you are in a delayed volatile chain. Extra stress all round.

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19 minutes ago, DarkHorseWaits-NoMore said:

Check the fine print and don't expect EAs or solicitors to know all the details. From talking to a guy at work who was selling to pay off the HTB component, it seems that HTB is a share of the property, which goes up or down with the property price valuation, which can be different to the price any mug buyer has offered you. To get out and pay back the HTB loan requires a special valuation report from a gov't approved agent (for an extra fee, £200 maybe?) to assess the new HTB 'share' value. This process can be a real pain to setup when trying to schedule with a sale, also there is a time limit on the valuation report info (3 months I think), which is not good if you are in a delayed volatile chain. Extra stress all round.

True. Its equity loan. It can go up or down depending on boom or bust. Those who bought with 40% help to buy will have to sell if prices go too high or too low. Both scenarios not good for them.

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1 hour ago, RickyM said:

 WHY THE FK IS THIS GOVERNMENT HELL BENT ON CREATING DEMAND OF HOUSING WITHOUT CREATING SUPPLY? ARE THEIR BACKERS BENEFITING FROM THIS BUBBLE?

 

Bcoz it helps tory donor landhoarders.

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The banks won't t lend to them without 25 percent deposit,not on the most affordable rates anyway. This is the banks themselves basically saying houses are overpriced and they want a decent deposit as a cushion. The prices are also too high to allow those without existing equity to get on the ladder. Left alone this situation would resolve itself, especially with buy to let leaving the market, with falling prices. However, this would never do so we have HTB. 

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2 hours ago, RickyM said:

A very first set of questions on HTB... If these so called young people cannot afford 10% Deposit then:

1. How will they pay the Balance 95% post HTB?

2. How will they manage higher Interest Rates on Current Prices ?

3. How will they manage Recessions with this level of borrowing?

And Finally: WHY THE FK IS THIS GOVERNMENT HELL BENT ON CREATING DEMAND OF HOUSING WITHOUT CREATING SUPPLY? ARE THEIR BACKERS BENEFITING FROM THIS BUBBLE?

 

1. Access to rates as low as 1.39% making monthly payments very manageable. 

2. Lenders have tightened stress tests on HTB borrowers to ensure they can cover rate hikes.

3. If they don't manage to keep their jobs, god knows. But same applies to non HTB buyers too.

4. They are making millions from HTB home sell ons based on HPI due to the 20% equity loan. Data was posted on an earlier thread here showing how much profit the GOV has made on HTB. Adds to the GOV will keep ramping house prices agenda.

Although its a 20% equity loan, the GOV does not know 20% of the property. It's just an interest-free (First 5 years, only 1.75% on 6th year then + RPI plus 1%) variable loan over 25 years (extended to 35 if your mortgage term is 35 years) tied to the price of your home.

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5 hours ago, nothernsoul said:

Put simply it allows people to buy a house they couldnt otherwise afford because the bank would not lend that much money too them, or without the required percentage of deposit  they wouldnt get the best rates. 

For example a couple who have scraped together 10 grand would probably only be able to afford a terrace between between 90 and 100 grand where i am.

We can't deduce exactly what the price would be in the absence of HTB, so we can't say the extent to which buyers have been harmed by the excess price paid. But I think in general the more people who use HTB, the greater the users have been harmed.

Assume ten houses are built. If all are sold and only one uses HTB then arguably the buyer hasn't overpaid (maybe the builder could have sold it to someone else without reducing the price).

If all ten were sold using HTB then it's unlikely the builder could have sold in the absence of HTB without price reductions.

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  • 297 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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