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First HTB fees due next month

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So these people will 

1) get fees on the loans 

2)could find when they come to then end of their mortgage deal the rates will go up

3)as alot of these are flats with leasehold good chance the leasehold fee's will increase too ...

How does remortgaging work then , aren't their specialised mortgages for HTB  ? Where the likely 100's of thousands owed to the goverment come into remortgaging now you have to pay fee's ? 

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6 hours ago, Fairyland said:

So what is the chance of a HTB owned home selling in the current climate?

Judging from the 2nd hand "New builds" going under offer in 3 areas of Milton Keynes I am following pretty good. That is if they are a 3BR house at around 300-315k.

It remains to be seen though how many of these will translate into real sales on Landregistry though. 

For the larger 4BR houses the chances are less rosy in the same areas. That said, in the last few weeks I've seen a flurry of these now going "under offer" One house which has been on the market for 6 months at about 425k and been through 3 agents just accepted an offer. No idea if this will end in an actual sale though.

These prices are ridiculous. The people selling have to live somewhere. I've tried to find out a little more about some sellers (just curiosity). One was selling to buy using HTB again in another new development (a bigger house), one was moving to an area with better schools (and older housing stock after inheriting money), another leaving MK.

Edited by Flopsy

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1 hour ago, Flopsy said:

Judging from the 2nd hand "New builds" going under offer in 3 areas of Milton Keynes I am following pretty good. That is if they are a 3BR house at around 300-315k.

It remains to be seen though how many of these will translate into real sales on Landregistry though. 

For the larger 4BR houses the chances are less rosy in the same areas. That said, in the last few weeks I've seen a flurry of these now going "under offer" One house which has been on the market for 6 months at about 425k and been through 3 agents just accepted an offer. No idea if this will end in an actual sale though.

These prices are ridiculous. The people selling have to live somewhere. I've tried to find out a little more about some sellers (just curiosity). One was selling to buy using HTB again in another new development (a bigger house), one was moving to an area with better schools (and older housing stock after inheriting money), another leaving MK.

Thank you for this information. What I am struggling to understand is how does the buyer(second owner) afford the house if the first buyer required HTB? For a few houses this may not be a problem but on an average the second buyer should also need HTB equity loan which isn't available as it is no longer a new build. Am i missing something?

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1 hour ago, Fairyland said:

Thank you for this information. What I am struggling to understand is how does the buyer(second owner) afford the house if the first buyer required HTB? For a few houses this may not be a problem but on an average the second buyer should also need HTB equity loan which isn't available as it is no longer a new build. Am i missing something?

I have no idea. When I checked the last download of prices paid I saw very few properties appearing. Few of those advertised shown as "sold"  that I was following actually went through in the end. 

There may be a small group of people coming into an inheritance, bank of M&D etc. The question is why are they buying these ex-HTL new builds at inflated prices? One new build area I did look at was being bought up by older couples downsizing. Maybe they had enough of renovating and repairs and imagine that a newer house with a small will be easier to maintain? They have the money.

The occasional property that does sell gives hope to all the others who then put their homes on the market. I don't think home sellers understand how few actually sell and how long it takes. 

One house we rented was bought by a couple and their parents paid the deposit for them. 

Houses are staying on the market here for a long time. There does appear to be a Spring effect right now but as I said it may be a mirage. The problem is that the other potential home sellers don't look at Landregistry and think everything is fine.

and so it goes on and on. If no one needs to sell then they won't.

Edited by Flopsy

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21 hours ago, Bear Hug said:

Thanks for the examples. Now I understand that it's actually a pretty good deal in terms of interest paid on that top up loan. 

Obviously the deal is only as good as the overall transaction, i.e. pretty bad considering developers would have just hiked the prices up for any slack HTB allowed).

That's it exactly.

The terms of the Help to Buy Equity Loan itself are pretty favourable but the price paid for the property, partly as a result of the existence of Help to Buy, is not.

12 hours ago, Andy T said:

Yeah that makes sense. Forgot that it's a 20% loan not 25%

So interest only but no repayment vehicle as such, unless buyer acquires a wedge of cash to put down. I guess for most it will just get absorbed by HPI after a long period of time, put to the back of the mind, ******ing expensive way to buy a house though and if they ever move there will be less equity carried forward, so next house purchase potentially needs a high LTV mortgage (maybe they'll come up with a 'Help' scheme for that)

It's up to 40% in London now.

It seems like the gamble is that house prices will rise over and above both the new build premium and the Help to Buy premium, and that the non-recourse and equity nature of the loan provides reassurance that if it doesn't pay off the borrower can walk away with minimal losses, (and the government can avoid any bad publicity about "Help to Buy prisoners").

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12 hours ago, rantnrave said:

At least one developer, Barratt, is trying to woo Help to Buy purchasers from five years ago into buying again on other developments through the same scheme.

Sales director Sara Parker said: “After five years, payments on the Help to Buy scheme start to incur interest but by moving home, and entering into a new Help to Buy arrangement, purchasers can have another five years interest free.”

http://www.propertyindustryeye.com/thousands-of-help-to-buy-purchasers-facing-ticking-time-bomb-in-loan-costs/

Sounds like they're struggling to get enough new people to use the Help to Buy scheme in the first place ;)

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So bit of maths here, if someone bought a house on HTB 5 years ago. Price £150k, deposit £7.5k, mortgage £112.5k and HTB loan £30k. Land Registry has prices up 33% over the last 5 years. So house is theoretically now £200k (in reality a bit less as newbuild/HTB will have been even more overpriced than the rest of the market)

So up till now on a no fee 5 year fix (I've used Nationwide for ease) they'd be paying £487.31/month.

The fee on the £30k loan this year would be £30k*0.0175, £43.75/month

If they want to remortgage and repay the HTB component they now have a £200k (see assumptions above, just keeping maths simple) house, I'll assume £100k left to pay on the mortgage, but owe the government £40k (33% increase) so they owe £140k on a £200k house which comes out on a no fee 5 year fix at £606.43/month.

So either £43.75/month extra or £119.12/month if they want to start paying back the full price. Obviously a few assumptions in there but I recon it's right on the order of magnitude additional cost.

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On 04/03/2018 at 11:32 PM, Mancunian284 said:

I’m not sure about this bit though.  Does it mean that the HCA could just not approve the sale leaving the HTB purchaser stuck with the property?

I came across this today, which gives a bit more detail:

Quote

Help to Buy Buyers’ Guide, February 2018

What happens when I sell my Help to Buy home?

When you sell your Help to Buy home, (unless you have already chosen to repay your Help to Buy equity loan) you will repay Homes England’s equity loan simultaneously. So if you initially purchased with a 75% mortgage and a 5% cash deposit and have made no other staircasing repayments (see Illustration 1 below), you will repay Homes England 20% of the value at the time you sell.

The Mortgage Administrator will collect Homes England’s repayment.

You can sell your home at any time and an independent valuer must decide what it is worth. Your property should be sold on the open market at the prevailing market valuation. If you do sell your property for more than the prevailing market value then the amount due to Homes England under the equity loan will be their percentage value of the actual sale price. Homes England will not agree to release its charge over the property for sales at less than market value.

[. . .]

What happens if property values fall?

Will I have to repay the full amount of Help to Buy assistance or just a percentage of the total sale proceeds?

When you sell your home, (unless you have repaid the Help to Buy equity loan document previously) the Help to Buy equity loan document commits you to repay a percentage of the market value equal to the percentage contribution of assistance received.

This means if the market value of your property falls below the level at which it was first purchased, you will repay less than the original amount Homes England contributed to the original purchase.

You must always show that the proposed sale value is at the prevailing market value before going ahead. Homes England’s Mortgage Administrator must approve the sale before allowing the second charge to be released.

As long as you have complied with all your obligations in the Help to Buy mortgage deed, you will not be required to provide for any shortfall in the equity loan repayment if you sell when values have fallen.

If you do not comply with the terms of the Help to Buy mortgage deed, Homes England will seek to recover all the money they are owed. Your solicitor will explain the Help to Buy mortgage deed to you before the property is purchased.

 

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There's an example mortgage deed available here:

Quote

6 Transfer of the Property and Determining the Repayment Sum

6.1 If the Borrower wishes to make a Disposal the Borrower must notify the Lender in writing to the effect that he wishes to make a Disposal.

6.2 Within fourteen (14) days of service of the Transfer Notice or where any of the other events set out in Clause 5 applies (each a “relevant event”), the Borrower shall apply (at its own cost) to the Valuer (whose decision shall be final) to determine the Market Value as at the date of receipt of the Transfer Notice or as at the date of the other relevant event as the case may be and within five (5) working days of receipt of such determination the Borrower shall serve a Valuation Notice on the Lender.

6.3 The Valuation Notice shall remain valid for a period of three (3) months (or four (4) months if extended by the Valuer) and in the case of a Disposal where completion of the Disposal does not take place within three (3) months (or as extended) of service of the Valuation Notice by the Borrower on the Lender, the procedure set out in Clauses 6.1 and 6.2 shall be repeated prior to the Disposal.

6.4 Upon completion of the Disposal in accordance with this Clause 6 or, where any other relevant event occurs within seven (7) days after determination of Market Value under Clause 6.2, the Borrower shall pay to the Lender the sums due in accordance with clause 4.1 PROVIDED THAT following completion of a Disposal no person shall be registered as proprietor of the Property until such time as the sums due in accordance with clause 4.1 are paid to the Lender at which time the Lender shall provide consent to the registration in accordance with Clause 11 and apply to the Land Registry to remove the restriction referred to in Clause 11 from the Register.

 

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25 minutes ago, Neverwhere said:

There's an example mortgage deed available here:

 

Thanks again for your help.  So if prices do fall (which it looks like they are at the moment, albeit at a glacial pace) the HTB purchaser can indeed just walk away.  

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23 minutes ago, Mancunian284 said:

Thanks again for your help.  So if prices do fall (which it looks like they are at the moment, albeit at a glacial pace) the HTB purchaser can indeed just walk away.  

Yes, although it looks like they have to pay for a valuation by a Chartered Surveyor, and achieve the valuation price within a three to four month window, in order to do so.

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28 minutes ago, Neverwhere said:

Yes, although it looks like they have to pay for a valuation by a Chartered Surveyor, and achieve the valuation price within a three to four month window, in order to do so.

It will be interesting to see how this works in practice in a rapidly falling market as "Homes England will not agree to release its charge over the property for sales at less than market value."

That's if that mythical situation could ever happen.

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5 minutes ago, Bear Hug said:

It will be interesting to see how this works in practice in a rapidly falling market as "Homes England will not agree to release its charge over the property for sales at less than market value."

That's if that mythical situation could ever happen.

That could possibly be behind the impasse I'm seeing with the resale of new build 4BR houses in the areas I am following

If the valuer is valuing them in line with the one house that miraculously sold for a silly price then the current owners won't be able to accept offers even if they wanted to?

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30 minutes ago, Bear Hug said:

It will be interesting to see how this works in practice in a rapidly falling market as "Homes England will not agree to release its charge over the property for sales at less than market value."

That's if that mythical situation could ever happen.

It does seem like their ability to sell will be down to whether or not the valuations they receive are realistic.

The need to pay for another valuation if the property is on the market for more than three to four months is also interesting; firstly because it might discourage holdouts for more than the valuation price, and secondly because a lack of offers at the valuation price might encourage successively lower valuations.

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22 hours ago, Andy T said:

Agree on the overpay, one of my relatives lives in an area where 1930's 3 bed semis are about 130k, a new development at the end of the same road - smaller 3 bed semis are around 200k on Help to Buy. Over 50% more expensive! they'll never maintain that premium over the larger older houses. I checked the sales data, looks like every one was purchased for the original listed price, I guess negotiating a discount is impossible with Help to Buy too.

My personal experience, builder gave me discount until I asked for HTB, he clearly told that you can either have discount or HTB

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Suresh, which just goes to show what a govt/housebuilder scam htb is, an artificial way to ensure that prices were held higt and their mates got what they wanted.

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10 hours ago, Mancunian284 said:

Thanks again for your help.  So if prices do fall (which it looks like they are at the moment, albeit at a glacial pace) the HTB purchaser can indeed just walk away.  

Only if the price falls within the HTB loan amount, if the fall is more than that, then you're in negative equity on the actual mortgage component, just like anyone else.

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15 hours ago, Flopsy said:

Judging from the 2nd hand "New builds" going under offer in 3 areas of Milton Keynes I am following pretty good. That is if they are a 3BR house at around 300-315k.

It remains to be seen though how many of these will translate into real sales on Landregistry though. 

For the larger 4BR houses the chances are less rosy in the same areas. That said, in the last few weeks I've seen a flurry of these now going "under offer" One house which has been on the market for 6 months at about 425k and been through 3 agents just accepted an offer. No idea if this will end in an actual sale though.

These prices are ridiculous. The people selling have to live somewhere. I've tried to find out a little more about some sellers (just curiosity). One was selling to buy using HTB again in another new development (a bigger house), one was moving to an area with better schools (and older housing stock after inheriting money), another leaving MK.

Do you know for sure that these 2nd hand new builds were sold on Help to Buy?

Newbuilds of an age between year 2000 and the present all look very similar to me, could hard to tell if they were built in the last 5 years or not.

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1 hour ago, suresh786 said:

My personal experience, builder gave me discount until I asked for HTB, he clearly told that you can either have discount or HTB

interesting, what would of been the difference between the traditional 'discounted' price, and the inflated HTB price then?

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15 hours ago, Flopsy said:

Judging from the 2nd hand "New builds" going under offer in 3 areas of Milton Keynes I am following pretty good. That is if they are a 3BR house at around 300-315k.

It remains to be seen though how many of these will translate into real sales on Landregistry though. 

For the larger 4BR houses the chances are less rosy in the same areas. That said, in the last few weeks I've seen a flurry of these now going "under offer" One house which has been on the market for 6 months at about 425k and been through 3 agents just accepted an offer. No idea if this will end in an actual sale though.

These prices are ridiculous. The people selling have to live somewhere. I've tried to find out a little more about some sellers (just curiosity). One was selling to buy using HTB again in another new development (a bigger house), one was moving to an area with better schools (and older housing stock after inheriting money), another leaving MK.

Amazed MK house prices are going mad tbh. Used to work there and there was a huge amount of supply. The place also has limited appeal for lots of people. Is it just the jobs market and links to London ?

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From Sancho's thread (new house price index has uk house prices falling)

New-builds in England and Wales are now 65% more expensive on average (£345,118) than they were in December 2006, compared to 38% more for old stock.

 

As we thought, the Help to buy scheme has done nothing but distorted new build prices by 30% and gifted the house builders/banks.

 

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2 hours ago, Andy T said:

Do you know for sure that these 2nd hand new builds were sold on Help to Buy?

Newbuilds of an age between year 2000 and the present all look very similar to me, could hard to tell if they were built in the last 5 years or not.

I've asked 2 of the sellers and they said yes. They were both 3BR houses

Never viewed one of the 4BR houses though. If I have time I will look at one on LR. Wondering though if the HTB charge will show up there?

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22 minutes ago, Flopsy said:

I've asked 2 of the sellers and they said yes. They were both 3BR houses

Never viewed one of the 4BR houses though. If I have time I will look at one on LR. Wondering though if the HTB charge will show up there?

maybe, from memory there is a tickbox on the search critieria for 'special transactions' or something like that

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1 hour ago, Andy T said:

From Sancho's thread (new house price index has uk house prices falling)

New-builds in England and Wales are now 65% more expensive on average (£345,118) than they were in December 2006, compared to 38% more for old stock.

 

As we thought, the Help to buy scheme has done nothing but distorted new build prices by 30% and gifted the house builders/banks.

 

cameron_laughing_banner.jpg

 

Edited by Si1

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