Converted Lurker Posted July 17, 2008 Share Posted July 17, 2008 (edited) Instinctively I want to say "pfftt, if it's the govt, there's a sting in the tail, it's gonna cost more over the long term, it's an effort to shore up losses for house builders, Gordo realises house building will be a modern day 'New Deal work folly' but he has to do something...." But on the face of it it works The measures include: * A new scheme to support first time buyers into affordable home ownership by renting first and buying later. Under the scheme, eligible households earning £60,000 a year or less will to able to rent a new home at a discounted rate for a period of two to three years. They will have the option to buy a part share in the home. The affordable rent, which will be 80 per cent of the market rent or less, will enable the household to save for a deposit to buy the share in the home. The new pilot scheme, called Rent to Home buy, is designed to give more choice and flexibility to first time buyers, and is part of the Government's low cost home ownership schemes http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0 Edited July 17, 2008 by Converted Lurker Quote Link to comment Share on other sites More sharing options...
JohnnyB Posted July 17, 2008 Share Posted July 17, 2008 The fault is that it's another silly scheme to support unaffordable housing. Basically, the Govt needs to butt out and let the market sort itself. Crashing house prices will ensure that many keyworkers can afford to buy their own home again. Quote Link to comment Share on other sites More sharing options...
munimula Posted July 17, 2008 Share Posted July 17, 2008 Instinctively I want to say "pfftt, if it's the govt, there's a sting in the tail, it's gonna cost more over the long term, it's an effort to shore up losses for house builders, Gordo realises house building will be a modern day 'New Deal work folly' but he has to do something.... But on the face of it it works The measures include: * A new scheme to support first time buyers into affordable home ownership by renting first and buying later. Under the scheme, eligible households earning £60,000 a year or less will to able to rent a new home at a discounted rate for a period of two to three years. They will have the option to buy a part share in the home. The affordable rent, which will be 80 per cent of the market rent or less, will enable the household to save for a deposit to buy the share in the home. The new pilot scheme, called Rent to Home buy, is designed to give more choice and flexibility to first time buyers, and is part of the Government's low cost home ownership schemes http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0 I'm assuming that when you sign one of these contracts you will be agreeing to eventually buy the house at today's price which is probably an unadjusted current builders asking price. In 3 years time when you start buying the property and it's fallen 30-40% you will effectively be paying 30-40% over the odds which will more than compensate the builders for the small 20% rent reduction (which probably won't even be a rent reduction anyway) Quote Link to comment Share on other sites More sharing options...
Jason Posted July 17, 2008 Share Posted July 17, 2008 A few questions I would have are: 1. Do you have to buy after 2-3 years? If not, is there any penalty (such as pay back the discounted rent part)? 2. 80% of market rents; what is the market rent? The rent valuation for new builds were vastly over inflated in the first place. Quote Link to comment Share on other sites More sharing options...
Jason Posted July 17, 2008 Share Posted July 17, 2008 Oh, and secondly what price does the council buy the empty new build off the developer for? This is the key issue; as I strongly disagree to tax payers supporting this market. Quote Link to comment Share on other sites More sharing options...
Converted Lurker Posted July 17, 2008 Author Share Posted July 17, 2008 (edited) I'm assuming that when you sign one of these contracts you will be agreeing to eventually buy the house at today's price which is probably an unadjusted current builders asking price.In 3 years time when you start buying the property and it's fallen 30-40% you will effectively be paying 30-40% over the odds which will more than compensate the builders for the small 20% rent reduction (which probably won't even be a rent reduction anyway) I'm digging around, but the noises I'm hearing is that it's open ended; no obligation to buy. As there's no mortgage agreed at the outset, they can't put a gun to your head and force you to buy, if you don't stack up for the mortgage now you're possibly less likely to in 3 years time after the recession has bitten into the economy and opportunities. The govt smell something, a raft of homelessness and a way of keeping building churn moving...? Edited July 17, 2008 by Converted Lurker Quote Link to comment Share on other sites More sharing options...
chichi Posted July 17, 2008 Share Posted July 17, 2008 80% of the market rent? Do they mean LHA rent levels? And when you add new rents into the area at 80% of full level that'll surely have an impact on LHA rent levels? If it has the overall impact of lowering LHA rent levels then that'd be a good thing. In the same way they have landlords paying rates on empty business property they should start looking at charging it to builders who've built these properties "as a business" to hurry up the movement in the market. Quote Link to comment Share on other sites More sharing options...
Guest X-QUORK Posted July 17, 2008 Share Posted July 17, 2008 Yet another desperate ploy to support the housing market at all costs. Fear not though, as with all these government schemes, the amount of people who actually end up benefiting will run into the dozens. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 17, 2008 Share Posted July 17, 2008 And WHO? is paying the builder up front? Quote Link to comment Share on other sites More sharing options...
Converted Lurker Posted July 17, 2008 Author Share Posted July 17, 2008 Oh, and secondly what price does the council buy the empty new build off the developer for? This is the key issue; as I strongly disagree to tax payers supporting this market. I agree, but right or wrong, it's gonna happen Jason, local govt can't step in and buy up all the unsold stock as its unaffordable through council tax, but central govt could fund it either directly or through special grants through the local govt. Leaving all those projects (those finished or unfinished) is such a waste, none of us want to see these (in some case very well built tower blocks) empty and decrepit? Let's turn this around Jason, you as a priced out first time buyer, close to a major city centre, what 'cherries on top' deal would you go for if this initiative comes to fruition? Quote Link to comment Share on other sites More sharing options...
It is different this time Posted July 17, 2008 Share Posted July 17, 2008 The affordable rent, which will be 80 per cent of the market rent or less, will enable the household to save for a deposit to buy the share in the home So people will be able to save for what? just to buy a share in the home! Another useless scheme and another desperate attempt by the corrupt muppets to keep HPI alive. Quote Link to comment Share on other sites More sharing options...
Rick62 Posted July 17, 2008 Share Posted July 17, 2008 So basically the government is giving money to the developers for nothing, not sure if the government is buying the properties initially, or giving the builders the 'shortfall' in the rent. 80% of the 'proper' rent on a new build (flat) is still more than it should be, and more than anyone with half a brain could negotiate. So the tenant isn't gaining. All these scheemes of the government are wasting our money to try and prop up the property market and building speculators. Quote Link to comment Share on other sites More sharing options...
mdman Posted July 17, 2008 Share Posted July 17, 2008 The flaw with this is it uses taxpayer money to pay off developers. If the rent paid by the home-occupier is 80% of the 'market rate', the government will pay the other 20% to developers/ property owners. So it subsidises an overpriced market impoverishing the taxpayer and those excluded from the scheme alike. If HMG aren't giving the other 20% to the developers, then what exactly is HMG doing here? Quote Link to comment Share on other sites More sharing options...
57percent Posted July 17, 2008 Share Posted July 17, 2008 But where do the govt get the money from? It's effectively social housing for any family earning less than 60k (95% of the population?), but they don't have houses/money to support the much smaller number looking for social housing now. Somehow they'll find a way to spend 2bn quid and help five families Quote Link to comment Share on other sites More sharing options...
chichi Posted July 17, 2008 Share Posted July 17, 2008 [quote name='mdman' date='Jul 17 2008, 10:28 AM' post='1218268 If HMG aren't giving the other 20% to the developers, then what exactly is HMG doing here? Running around looking for scooby snacks? Gordon says no more bust so they are doing what he says. Quote Link to comment Share on other sites More sharing options...
babesagainstmachines Posted July 17, 2008 Share Posted July 17, 2008 Who would buy a house when you can live in one for 1/5th of the cost of servicing mortgage interest? Hands up, anyone? Thought not... Quote Link to comment Share on other sites More sharing options...
piece of paper Posted July 17, 2008 Share Posted July 17, 2008 Instinctively I want to say "pfftt, if it's the govt, there's a sting in the tail, it's gonna cost more over the long term, it's an effort to shore up losses for house builders, Gordo realises house building will be a modern day 'New Deal work folly' but he has to do something...." But on the face of it it works The measures include: * A new scheme to support first time buyers into affordable home ownership by renting first and buying later. Under the scheme, eligible households earning £60,000 a year or less will to able to rent a new home at a discounted rate for a period of two to three years. They will have the option to buy a part share in the home. The affordable rent, which will be 80 per cent of the market rent or less, will enable the household to save for a deposit to buy the share in the home. The new pilot scheme, called Rent to Home buy, is designed to give more choice and flexibility to first time buyers, and is part of the Government's low cost home ownership schemes http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0 Insofar as it works at all, it is because the supposed value of the properties is artficially inflated. It is a gifted deposit scheme wearing boxers instead of Y-fronts. If you have a product that is worth £50 and can convince the purchaser that it is worth £100, there is no end to the number of fancy-named incentives that you can offer without incurring a loss. p-o-p Quote Link to comment Share on other sites More sharing options...
Disillusioned Posted July 17, 2008 Share Posted July 17, 2008 OK, let's assume that his scheme goes ahead. Let's also assume that the Taxpayer is footing the bill. What are the disadvantages to the individual taking up the scheme? One I agree with is the possibility that the rents might not be as discounted as one might like, but I'm interested to know other reasons why the individual involved might suffer. (Saying that this is bad in general - because it is paid through taxes and supports the bubble - is all well and good but I'm more interested in understanding how it might affect the person doing it.) Quote Link to comment Share on other sites More sharing options...
CharlieChuck Posted July 17, 2008 Share Posted July 17, 2008 A few questions I would have are:1. Do you have to buy after 2-3 years? If not, is there any penalty (such as pay back the discounted rent part)? 2. 80% of market rents; what is the market rent? The rent valuation for new builds were vastly over inflated in the first place. This is similar to the questions I would have. Plus, Are the builders being paid on top of this by the government, if so how much? If not the only incentive to builders is to free up some of their stock and have an outlet for future building, albeit at reduced margins. I think this is just spin (yet again), although it could potetnially help the building industry, depending on the scale of it's take up. If it is large enough in scale, it could certainly put downwards pressure on private rents, which wouldn't be a bad thing, but that would cause the government an even bigger headache by more forced sales of BTL. Quote Link to comment Share on other sites More sharing options...
Nicholas Cage Posted July 17, 2008 Share Posted July 17, 2008 (edited) It is for Registered Social Landlords and other Housing Corporation partners, not people off the street. "Rent to HomeBuy" is a version of the existing "New Build Homebuy" and it reverts to "New Build Homebuy" at a vague period of years. It does look like a good idea for some people, very complex system though. http://www.communities.gov.uk/documents/ho...ousingchallenge The Government would like to see new ways of giving 2.5 people a hand up to homeownership. We have asked the Housing Corporation to pilot a ‘Rent to HomeBuy’ scheme. This scheme aims to help prospective first time buyers who find that they are unable to buy a share of a property through HomeBuy at the present time (for example because they have been unable to find a suitable mortgage) but could do so in the future, for example when mortgage availability has improved. Eligible households will be able to rent a new build property at less than market rent for a pre-specified period. At the end of that time (or sooner if they are able) they will have the option to buy a share of the property through the New Build HomeBuy scheme. This scheme aims to help prospective first time buyers who find that they are unable to buy a share of a property through HomeBuy at the present time (for example because they have been unable to find a suitable mortgage) but could do so in the future, for example when mortgage availability has improved. Registered Social Landlords and other Housing Corporation partners who are interested in participating in the ‘Rent to HomeBuy’ pilot are being asked to put in bids during the Housing Corporation’s current bidding round. The Housing Corporation is now in discussions with many of the major housebuilders to discuss options for bringing unsold new homes into the affordable housing sector and – within two weeks of launching the system – two substantial offers have already been taken through the clearing house process. What is New Build HomeBuy and how does it work?Homes are sold as leasehold properties on shared ownership terms – they can be flats or houses. The minimum share you can purchase is 25%, and 75% is the usual maximum. You will need to be able raise a mortgage for the share you want to purchase, and you will pay rent on the share you don’t own. Rents are calculated to be affordable. As you become able to afford it, you can buy additional shares until own 100%. This is known as ‘staircasing’. When you want to sell the property you can sell the share you own to another household nominated by your landlord or you can staircase to 100% and sell it in the normal fashion. However, your landlord may want to buy the property back from you to offer to other households who want to enjoy low-cost home ownership. They will tell you if they want to do this when you tell them that you want to sell. The property is sold at market value and you will benefit from any equity which has built up on the share that you own. http://www.housingcorp.gov.uk/server/show/nav.550 Edited July 17, 2008 by maxwell Quote Link to comment Share on other sites More sharing options...
piece of paper Posted July 17, 2008 Share Posted July 17, 2008 The property is sold at market value and you will benefit from any equity which has built up on the share that you own. Should read "The property is sold at market value and you will benefit from the equity, if any, which has built up on the share that you own." p-o-p Quote Link to comment Share on other sites More sharing options...
steve99 Posted July 17, 2008 Share Posted July 17, 2008 The problem could very easily be solved, the government and by extention the county and town councils own vast tracts of land, both brown and green suitable for building. They should mandate this land for house (not flat) building and it should be totaly free, then they should get a group of architects, quantity surveyors, building engineers together (ie employ them direct) get them to design real houses, priced according to real, not imagined material and building costs then put out the orders to the building companies at the quality and price dictated, not a tender. If the private sector doesn't want to do this, then bring in builders from Spain or Mongolia for that matter and do it. Houses to then be sold for cost and not a penny more, no fictitious overheads etc etc. Then we will truly have a £60K house (not flatpack hut) and all housing prices will come down to match. This would work, there is no impediment to it whatsoever beyond greed , the never ending layers of bureaucracy all wanting a slice of every transaction and maintaining the ever present status quo of expensive housing in the UK(Even at the bottom of so called housing cycles). (to top it off, they should confiscate land that builders refuse to build on due to behaving like spoilt brats) This is what real concerned politicians would do, this is what opposition parties should now pronounce as policy. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 17, 2008 Share Posted July 17, 2008 The property is sold at market value and you will benefit from any equity which has built up on the share that you own. Should read "The property is sold at market value and you will benefit from the equity, if any, which has built up on the share that you own." p-o-p so you could fall into negative equity on this scheme. Quote Link to comment Share on other sites More sharing options...
Home_To_Roost Posted July 17, 2008 Share Posted July 17, 2008 so you could fall into negative equity on this scheme. Seems so Quote Link to comment Share on other sites More sharing options...
piece of paper Posted July 17, 2008 Share Posted July 17, 2008 so you could fall into negative equity on this scheme. Nah, property prices only ever go up. p-o-p ps - Except when they don't! 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.