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mattyboy1973

Taxpayers fleeced of £85k

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Woman whose London flat has slumped in value is told she can pay back £10,000 of £95,000 loan

Grenfell-type cladding on London flats to be replaced at insurer's cost

This seemed entirely dubious at the time, when the government let the borrow off the hook for £85k based purely on a "market valuation". Surely they should have been forced to market the flat for this notional £50k to let the market decide the true value before agreeing to write off 90% of the loan? If the borrowers have already cashed in, and assuming values are now back to where they were now that the insurance claim is settled, have we just been fleeced for £85k? Absurd.

 

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That's crazy.  The builders are in dispute about it, but I'd assume that at some point it will be replaced.

I bet she won't owe that £85k again once it is sorted.

Do all help-to-buy loans work like this?  If I was to fail to maintain my house and let it become a neglected wreck then can I ask them to let me off most of the money I owe them?

I'm guessing that the payments don't rise if the value goes up - so the losses or our problem but the profits are the homeowner's to keep.

What happened to "buyer beware"?

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You are guessing wrong.

HTB is a shared ownership agreement. Property goes up, you owe more. Thing is, the likelihood of the price going up is fairly small.

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On 11/07/2018 at 13:01, Tes Tickle said:

That's crazy.  The builders are in dispute about it, but I'd assume that at some point it will be replaced.

I bet she won't owe that £85k again once it is sorted.

They're not in dispute about it any more, the insurers are going to pick up the tab. The HTBer already had 90% of the loan written off on the basis of a one-off valuation (that was presumably base off the prospect of the insurers not paying up), even though they had no intention of selling the flat. That's the issue here.

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Oh, I see - I didn't know that HTB loans even were part ownership.  That's worse than I thought.

So all of us are buy to let investors then, and are on the hook for negative equity when the house of cards comes tumbling down.

Actually it seems to be some kind of muddled combination of a loan and part ownership.  She's paying interest based on an outstanding balance, she's not paying rent.  Surely if it's a loan then it should be independent of the house's value, if it's rent then it should be the market rental price - this is some kind of muddled up mongrel of everything.

Do they automatically raise everyone's rent/interest payment if the alleged value goes up?

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11 minutes ago, Tes Tickle said:

Oh, I see - I didn't know that HTB loans even were part ownership.  That's worse than I thought.

So all of us are buy to let investors then, and are on the hook for negative equity when the house of cards comes tumbling down.

 

Great investment isn't it? Not only does every taxpayer have to cough up £70 a month for the yearly £25bn housing benefit giveaway to landlords, we are also on the hook for the losses of this disastrous policy as well.

We get zero upside and all the downside, including more expensive housing. Socialism at it's worse.

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42 minutes ago, cashinmattress said:

Is this not just for the 'help to buy' part of the loan?

Yes. You pay back capital based on the valuation of the property, which can be either more or less. Ignoring the insanity of the whole idea for a moment, and the fact that most HTB properties are under water from the moment of exchange due to the HTB/new build premium, it has now also been established by precedent that the borrower can pick and choose when to pay off the capital so that it can be done at the most convenient (lowest value) time - and also seemingly on a simple market valuation, however bonkers that valuation might be. Case in point for the flat in the article being that this was never "worth" £50k (OK - it might be - but lets gloss over that as well). The flat was valued at ~£500k before cladding issues, with a potential charge of (I think) £75k hanging over each, which has now evaporated. If you want to pay off an HTB loan at a lower valuation than purchase then you should be forced to market the property at the new vauation for a few months beforehand.

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SO are there any estimates of how many of these hutches  the tax payer is on the hook for ? 

Grenfell Tower-style cladding identified in 470 high-rise blocks

https://www.theguardian.com/uk-news/2018/jun/28/private-high-rise-towers-flammable-cladding-grenfell

Edited by Saving For a Space Ship

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I've posted on this before. Surveyors do "special" HTB redemption valuations.These can determine a low value in order to reduce the HTB equity loan repayment. Then another valuation is done for the purpose of remortgaging in order to finance the other 60% of the loan. Not surprisingly, that valuation is much higher than the HTB one.  If the value really had fallen from 500k to 50k the borrower couldn't refinance the remaining 300k. It is a scam, albeit an officially sanctioned one. 

Edited by ingermany

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9 hours ago, ingermany said:

I've posted on this before. Surveyors do "special" HTB redemption valuations.These can determine a low value in order to reduce the HTB equity loan repayment. Then another valuation is done for the purpose of remortgaging in order to finance the other 60% of the loan. Not surprisingly, that valuation is much higher than the HTB one.  If the value really had fallen from 500k to 50k the borrower couldn't refinance the remaining 300k. It is a scam, albeit an officially sanctioned one. 

That wouldn't surprise me.

But extraordinary claims require extraordinary evidence.

Could you elaborate on your sources please ?    :)

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14 hours ago, ingermany said:

I've posted on this before. Surveyors do "special" HTB redemption valuations.These can determine a low value in order to reduce the HTB equity loan repayment. Then another valuation is done for the purpose of remortgaging in order to finance the other 60% of the loan. Not surprisingly, that valuation is much higher than the HTB one.  If the value really had fallen from 500k to 50k the borrower couldn't refinance the remaining 300k. It is a scam, albeit an officially sanctioned one. 

ta for that.

If the value fell this much in reality, wouldn't the banks have to institute a margin call ?  

Edited by Saving For a Space Ship

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13 hours ago, Si1 said:

That wouldn't surprise me.

But extraordinary claims require extraordinary evidence.

Could you elaborate on your sources please ?    :)

This https://www.rjharmer.co.uk

site contains instructions on how to get concurrent HTB and remortgage valuations in order to redeem the government loan through a mortgage by using the difference between the two valuations to achieve an acceptable LTV for the lender. 

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1 hour ago, ingermany said:

This https://www.rjharmer.co.uk

site contains instructions on how to get concurrent HTB and remortgage valuations in order to redeem the government loan through a mortgage by using the difference between the two valuations to achieve an acceptable LTV for the lender. 

Indeed

 

https://www.rjharmer.co.uk/remortgage/

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6 minutes ago, mattyboy1973 said:

Sounds a bit "fraudy" to me.

Using government funds to provide preferential interest free unsecured loans to property investors who channelled the cash straight into the personal bank accounts of Persimmon's directors definitely sounds fraudy.  Given the basic fundamentals of the scheme, everything associated with it is going to be somewhere bordering on criminal or unethical. There will be massive mis-selling claims. 

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  • 301 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% +
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      • Even
      • up 2.5%
      • up 5%



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