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Are some HTBers planning to sell after the 5 year period?

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Ealier in the HPI shilling Evening Standard I saw an article about a couple who recently bought a flat in Central London and were really pleased that their mortgage reypayments are the same as their previous rent. At the end of the article the issue of paying the interst on the government loan was raised. The man from the couple said that they plan to sell at the 5 year point because he thinks prices will go up. So they are using HTB as a house flipping tool.

I wonder how many HTBers are planning the same?

If I can find a link for the article I will post it.

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Firstly, the loan's an "equity loan" isn't it? 40% in London. Any net profit from HPI is going to reduced by having to pay off the loan that will also have increased by HPI. 

Secondly the likelihood is that Help to Buy has caused significant inflation of new build prices relative to resales. When they come to sell, they'll be competing against older flats which don't have that 40% added on (unless they decided to extend HTB to all properties).

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And if the property has fallen in value, the gvt office in charge will have a big say in allowing the sale to go through. Write offs are not an easy process to go through

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All of the people that I know who had considered HTB were using it to buy a flat that they coud then sell at the end of five years and use the gains to buy a house. I think this may be part of the story that the housebuilders are telling the people they are trying to flog the flats to..... "dont worry about the increased repayments in five years, by that time your flat will be worth double and you can sell it to pay for a deposit on a house"

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Flats new leasehold build into the sky, no shortage of supply, a big jump from a city flat to a freehold house where land is at a premium......perhaps they are planning to move away?;)

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12 minutes ago, stuckinlimbo said:

All of the people that I know who had considered HTB were using it to buy a flat that they coud then sell at the end of five years and use the gains to buy a house. I think this may be part of the story that the housebuilders are telling the people they are trying to flog the flats to..... "dont worry about the increased repayments in five years, by that time your flat will be worth double and you can sell it to pay for a deposit on a house"

well that's how bubble valuations work - based on the assumption they'll be even higher in future

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1 hour ago, stuckinlimbo said:

All of the people that I know who had considered HTB were using it to buy a flat that they coud then sell at the end of five years and use the gains to buy a house. I think this may be part of the story that the housebuilders are telling the people they are trying to flog the flats to..... "dont worry about the increased repayments in five years, by that time your flat will be worth double and you can sell it to pay for a deposit on a house"

flying_pig.jpg

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Is this fcking amateur hour? Never sell bruv. Just rent it out? Sure. Just bang the rents up? Granted. But SELL?? Are you FCKING INSANE bruv??! 

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1 hour ago, thewig said:

Is this fcking amateur hour? Never sell bruv. Just rent it out? Sure. Just bang the rents up? Granted. But SELL?? Are you FCKING INSANE bruv??! 

sure you not on the bitcoin thread. ??

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I only pick up the London freebie papers now to read the weekly property section. Each week a young couple are quoted saying at least one of the following:

  • ·         The property is close to their jobs in London so they have saved on transport/time commuting

  • ·         They will soon be ‘staircasing’ to increase their ownership %

  • ·         They are paying less than they were in rent

  • ·         Constant references to the “Crossrail effect” and how their investment will pay off because prices will go up

  • ·          They are close to amenities that would be of interest to young Millennials

  • ·         They would not have been able to buy without shared ownership aka if you want to buy in the SE this is the only game in town short of inheritance.

I am pretty sure that some of the quotes must be made up because there are simply far too many references to the “Crossrail effect”. 

While reading these articles you look around the tube carriage and see loads of adverts for shared ownership as well. All contain young people who are happy and confident.

The shared ownership adverts remind me in many ways of the university propaganda I encountered during my 20s. You are being sold a dream.

Meanwhile, I’ve just returned from a tip to a provincial Northern town with decent transport links into Liverpool and Manchester where there are flats for FTBs selling for between 70k and 80k. I’ve come to realise that is a far more sensible next step.

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On 22/02/2019 at 08:50, Clarky Cat said:

Secondly the likelihood is that Help to Buy has caused significant inflation of new build prices relative to resales.

I believe this must be true, but I have yet to come across any studies that put a figure on it. My gut feeling is that HTB eligible new-builds must lose a significant percentage from the moment the first sale is agreed and the property loses its new-build status. I wonder what that percentage is? There is no doubt that a significant number of FTBs can only buy by using the HTB scheme, so who are the current HTB owners planning to sell their FTB-suitable second-hand homes to (at an even higher price)?

Edited by mattyboy1973

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8 minutes ago, mattyboy1973 said:

I believe this must be true, but I have yet to come across any studies that put a figure on it. My gut feeling is that HTB eligible new-builds must lose a significant percentage from the moment the first sale is agreed and the property loses its new-build status. I wonder what that percentage is? There is no doubt that a significant number of FTBs can only buy by using the HTB scheme, so who are the current HTB owners planning to sell their FTB-suitable second-hand homes to (at an even higher price)?

Nurse!

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2 hours ago, mattyboy1973 said:

There is no doubt that a significant number of FTBs can only buy by using the HTB scheme, so who are the current HTB owners planning to sell their FTB-suitable second-hand homes to (at an even higher price)?

They are not planning to sell them :(

Colleague at work, early 20s, has just bought a newbuild flat of all things, 200k HTB. The plan after 5 years is to "rent it out", and "use that money" to pay a second mortgage on a house.

This is after having got the mortgage on the flat, with MMR rules. Big disconnect there.

 

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So in London the only way these people could buy is with a 40% loan from gov, with this not available when the property is no longer new just how many people do the think are going to be able to pay the full price ?

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I guess if the govt owns 40% of your home, there's not much you can do with it. Any improvement that adds value will be 40% lost to the govt when you sell. Less of an issue with new homes obviously, but even so, you're basically not much different from a renter. 

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On 22/02/2019 at 08:50, Clarky Cat said:

Firstly, the loan's an "equity loan" isn't it? 

There are two types of htb

https://www.helptobuy.gov.uk

1-Equity loan: gov owns the property with you and shares hpi increases or decreases

2-Shared ownership: gov buys a portion of the property and rents it to you. 

There is more to the schemes but this is the high level overview.

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On 2/23/2019 at 8:51 AM, mattyboy1973 said:

I believe this must be true, but I have yet to come across any studies that put a figure on it. My gut feeling is that HTB eligible new-builds must lose a significant percentage from the moment the first sale is agreed and the property loses its new-build status. I wonder what that percentage is? There is no doubt that a significant number of FTBs can only buy by using the HTB scheme, so who are the current HTB owners planning to sell their FTB-suitable second-hand homes to (at an even higher price)?

I agree, I've seen evidence of this in Birmingham.

My mother bought a new build, second house 200k, 2002 after the crash etc was worth 200k again in 2015 has only just mad it to 220k.. that's if sombody is willing to pay it. In Birmingham there is plenty of old housing stock, that are very good value for money.

 

My house, three bed was 100k 2015, 3 roads away there are new builds, a three bed is 220k... there all being bought by young people who just get caught up in the sale tactics and glam/dream.

 

Truth is there not worth the money and I often see many sitting up for sale for months, while near me there getting 30 views + per listing and are often on the market for only 2 weeks.

The only significant advantage of new builds is efficiency, draught proofing, central heating and other efficiency measures significantly helps. Overall they aren't worth it  more fool them.

 

Older houses are at true market value, new builds are inflated. 

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1 hour ago, Speed1987 said:

I agree, I've seen evidence of this in Birmingham.

My mother bought a new build, second house 200k, 2002 after the crash etc was worth 200k again in 2015 has only just mad it to 220k.. that's if sombody is willing to pay it. In Birmingham there is plenty of old housing stock, that are very good value for money.

 

My house, three bed was 100k 2015, 3 roads away there are new builds, a three bed is 220k... there all being bought by young people who just get caught up in the sale tactics and glam/dream.

 

Truth is there not worth the money and I often see many sitting up for sale for months, while near me there getting 30 views + per listing and are often on the market for only 2 weeks.

The only significant advantage of new builds is efficiency, draught proofing, central heating and other efficiency measures significantly helps. Overall they aren't worth it  more fool them.

 

Older houses are at true market value, new builds are inflated. 

You didn't mention foundations. I think you may find they have become subject to more stringent requirements down the years and are some of the best in the world.

That of course may not much help the garbage erected on top of them unless there's a saving from re-using original foundations once the rest has fallen to bits. If that is even feasible.

People have had years of warnings about new properties.  Quality issues, overcharging and lately leasehold scams, don't they even read up about what they're buying?.

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On 23/02/2019 at 11:18, mrtickle said:

They are not planning to sell them :(

Colleague at work, early 20s, has just bought a newbuild flat of all things, 200k HTB. The plan after 5 years is to "rent it out", and "use that money" to pay a second mortgage on a house.

This is after having got the mortgage on the flat, with MMR rules. Big disconnect there.

 

don't you have to get permission from the 20-40% equity share to rent it out?

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27 minutes ago, HowMuch! said:

don't you have to get permission from the 20-40% equity share to rent it out?

not if you advertise it on gumtree ;)

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34 minutes ago, HowMuch! said:

don't you have to get permission from the 20-40% equity share to rent it out?

It's explicitly in breach of HTB TnCs, you have to buy the portion left first. 

Also remortgaging seem difficult for HTB owners. Maybe it has to do with the down valuation the place receives and the gvt unwillingness to accept it

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