warrior88 Posted December 18, 2017 Share Posted December 18, 2017 Saw this in facebook, 5% towards deposit. Why not reduce price? Probably as it impacts sales price and HPI calculation. Quote Link to comment Share on other sites More sharing options...
Richmond Posted December 18, 2017 Share Posted December 18, 2017 8 hours ago, warrior88 said: Saw this in facebook, 5% towards deposit. Why not reduce price? Probably as it impacts sales price and HPI calculation. Nah, if you have no deposit you can't get a mortgage and can't buy (even if you have good income). This lets people buy who couldn't do normally. Reducing the price by 5% wouldn't have the same effect. Quote Link to comment Share on other sites More sharing options...
Toast Posted December 18, 2017 Share Posted December 18, 2017 I may be reading this wrongly, but it looks like an attempt at mortgage fraud. Is that 5% to be considered as (part of) the deposit when talking to your bank? Quote Link to comment Share on other sites More sharing options...
thewig Posted December 18, 2017 Share Posted December 18, 2017 me and the wife were looking at taking on a big DEBT on a newbuild about eight nine years ago the buliders then were offering 'gifted deposits which I couldn't get my head around at the time, asked the agent to explain it to me which he couldn't do, basically said you don't need to worry about what it is or how it works because you're just the mark it was something along the lines of the house 'sells' for £300k but you only pay £240k because the builder gifts you £60k my questioning was along the lines of "so where exactly is the £60k?" "so the asking price is £240k not £300k then?" "can I have the £60k in premium bonds rather than cash?" needless to say thanks to this site we didn't buy the house and its probably now asking £450k with no gifted deposit in sight Quote Link to comment Share on other sites More sharing options...
warrior88 Posted December 19, 2017 Author Share Posted December 19, 2017 Couple of more such ads I saw yesterday! Quote Link to comment Share on other sites More sharing options...
Nationalist Posted December 19, 2017 Share Posted December 19, 2017 I remember this from the 90s crash. The gifted deposit keeps the numbers going to the Land Registry high so valuations on other properties in the development are not affected. There's probably a stamp duty downside which did not really exist in the 90s though, especially if you are into a new band thanks to the "gift". Quote Link to comment Share on other sites More sharing options...
warrior88 Posted December 19, 2017 Author Share Posted December 19, 2017 1 hour ago, Nationalist said: I remember this from the 90s crash. The gifted deposit keeps the numbers going to the Land Registry high so valuations on other properties in the development are not affected. There's probably a stamp duty downside which did not really exist in the 90s though, especially if you are into a new band thanks to the "gift". It would be interesting to see if correction actually happens - seems like off plans flat are just not selling! Quote Link to comment Share on other sites More sharing options...
Ah-so Posted December 19, 2017 Share Posted December 19, 2017 Seems like a flipper's dream - they can back out if prices go the wrong way and profit if they go up. Quote Link to comment Share on other sites More sharing options...
Fromage Frais Posted December 19, 2017 Share Posted December 19, 2017 (edited) 6 hours ago, Nationalist said: I remember this from the 90s crash. The gifted deposit keeps the numbers going to the Land Registry high so valuations on other properties in the development are not affected. There's probably a stamp duty downside which did not really exist in the 90s though, especially if you are into a new band thanks to the "gift". Some businesses ie developers/hotels etc have certain covenants in their loan agreements. For example say you have a development of flats worth 400k each in your application with a honking great loan against them. The bank may say that the said flats need to have a value of x lest the loan be called in for breaking the deal. I distinctly remember viewing a chain of small hotels where the owner who I know showed me he never missed a payment on his loans....just the market for hotels collapsed ergo the value dropped 40%+ and it was called in. from that day on I always watch out for those type of clauses. The property equivalent of a Margin Call. So if these developers are up to their eyeballs in debt + they thought their prices would be 20% higher this year 2017 then say 2014 they may not actually be able to reduce... if they did it would at a stroke make that the price of all the other apartments > leading to ruin Edited December 19, 2017 by Fromage Frais Quote Link to comment Share on other sites More sharing options...
warrior88 Posted December 20, 2017 Author Share Posted December 20, 2017 16 hours ago, Fromage Frais said: Some businesses ie developers/hotels etc have certain covenants in their loan agreements. For example say you have a development of flats worth 400k each in your application with a honking great loan against them. The bank may say that the said flats need to have a value of x lest the loan be called in for breaking the deal. I distinctly remember viewing a chain of small hotels where the owner who I know showed me he never missed a payment on his loans....just the market for hotels collapsed ergo the value dropped 40%+ and it was called in. from that day on I always watch out for those type of clauses. The property equivalent of a Margin Call. So if these developers are up to their eyeballs in debt + they thought their prices would be 20% higher this year 2017 then say 2014 they may not actually be able to reduce... if they did it would at a stroke make that the price of all the other apartments > leading to ruin Yes that is probably true, so both Bank covenants (Debt) and HPI to blame Quote Link to comment Share on other sites More sharing options...
thewig Posted December 20, 2017 Share Posted December 20, 2017 17 hours ago, Fromage Frais said: Some businesses ie developers/hotels etc have certain covenants in their loan agreements. For example say you have a development of flats worth 400k each in your application with a honking great loan against them. The bank may say that the said flats need to have a value of x lest the loan be called in for breaking the deal. I distinctly remember viewing a chain of small hotels where the owner who I know showed me he never missed a payment on his loans....just the market for hotels collapsed ergo the value dropped 40%+ and it was called in. from that day on I always watch out for those type of clauses. The property equivalent of a Margin Call. So if these developers are up to their eyeballs in debt + they thought their prices would be 20% higher this year 2017 then say 2014 they may not actually be able to reduce... if they did it would at a stroke make that the price of all the other apartments > leading to ruin you just described the entire housing "market" smoke and mirrors but mainly just DEBT, lots and lots of DEBT Quote Link to comment Share on other sites More sharing options...
warrior88 Posted January 18, 2018 Author Share Posted January 18, 2018 So another one, stamp duty paid and three year free travel on tfl.https://www.inyourarea.co.uk/news/how-can-i-commute-to-canary-wharf-for-free-by-buying-a-property/ 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.