Tuesday, September 2, 2008

Gordon Brown tempts FTBs to buy into a crashing property market

'Free loans' offer to homebuyers

The government is to promise first-time buyers in England "free" loans of up to 30% of their home's value, in an effort to reinvigorate the housing market. Yes the long awaited comeback is nothing more than a get poor quick scheme to tempt FTBs into a crashing property market that can only fall. NuLabour NuDebts NuNegativeEquity !

Posted by nooneo @ 12:51 AM (2045 views)
Please complete the required fields.



26 thoughts on “Gordon Brown tempts FTBs to buy into a crashing property market

  • Crazy crazy idea. Nice graph though:

    Reply
    Please complete the required fields.



  • “Free Loans” but only for 5 years! Can’t quite believe the BBC has written such a headline. It is a case of reading the small-print. This is totally scandalous, and I have two simple questions:

    1. Why 5 years and not 10 years? Is it anything to do with re-election?

    2. Why 30% and not 50%? Is the 30%, the governments estimate of the HPC?

    Reply
    Please complete the required fields.



  • I am genuinely flabbergasted by this.

    it is so monstrously stupid, shallow, illconceived and unfair, i am frantically checking my calendar to confirm that it’s September 1st not April 1st.

    Reply
    Please complete the required fields.



  • I seriously believe that the PM and the Cabinet and their advisors need to be tested for drugs. And if tested positive should be immediately be booted out of office.

    Reply
    Please complete the required fields.



  • it_is_going_with_a_bang says:

    Firstly, this is so much bigger than a a FTB crisis now.

    It is about time this government stopped messing with people’s lives. If is is FTB buyers they are trying to help then let the market adjust itself and FTB
    won’t need this type of promise. Up until now every propaganda plan thrown up by the BBC has had catches and not been in the interest of FTB at all.

    What happens if the FTB wants to sell in 3 years at a 20% loss – will the government take the loss? Probably not!

    Reply
    Please complete the required fields.



  • of course it’s not first time buyers they want to help

    why isn’t this being offered to every first time buyer looking to buy any property, rather than only those who buy from one of the “large-scale” property firms

    “This will help the housebuilding industry weather difficult conditions, so that, when the market recovers, they are ready to expand and get back on with building the new homes the country needs for the long term.”

    it’s about bailing out failing private companies (who cleaned up during the bull run) by subsidising them through (in this case indirectly) providing government loans. they’ve done to for the banks, so why not the home builders.

    Reply
    Please complete the required fields.



  • “The government is to promise first-time buyers in England “[interest] free” loans of up to 30% of their home’s value, in an effort to reinvigorate the housing market.”
    … I hope this is a typo, I was born in England but the last time I looked at my passport it said my nationality was “British”, but to carry on …
    OK, so say a conservative average of 15% of the average house price of say 180,000 quid. That make 27,000 quid to each lucky English FTBer! …

    “A spokesman added that “hundreds of millions of pounds [of tax-payers money]” had been put aside in the last Budget for such a move. ”
    And say it’s a generous 500 million quid, sounds a lot but it’s only about 18,500 interest-free loans.

    Given that the governments figures had mortgage volumes running at about 100,000 per month before Oct 2007, this new policy represents at best a 2% annual volume injection.
    Either I have my numbers way off or the government still hasn’t got a grasp on the scale of the problem here!!

    Reply
    Please complete the required fields.



  • Using taxpayer money, of course.

    Reply
    Please complete the required fields.



  • Nice promise….shame they don’t have the money.

    Reply
    Please complete the required fields.



  • saw an FTB interviewed on the BBC this morning saying that she was disgusted that the government were going to use her taxes to pay to keep the potentially reposessed, through their own bad judgement,
    in homes she couldn’t even dream of being able to afford. I couldn’t believe that Brown Broadcasting Corp would allow a bear to be heard, but this was at 6.05am this morning. I am sure that will be the only airing of this interview.

    Reply
    Please complete the required fields.



  • Interesting 30% over 5 years, sound familiar?

    A 30 % housing correction on the radar and give it 5 years(2014) to recover, that should do it….

    Reply
    Please complete the required fields.



  • Morning All

    I wonder if this whole ‘Darling fessing up’ followed by this, is as I’ve been saying – Labour making every effort to crash the market ASAP in the hope it will have levelled by the end of 2009.

    Re: this particular article/buyers direct loan. Have labour been reading this site ?

    I don’t like the idea of giving FTB loans to prop up politicians BTL portfolios – which is what this amounts to.

    However it was I that voiced government lending ‘direct’ to keep ”responsible” home owners in their homes rather than letting them be repo’d.

    If only labour read things properly. Any tax payer money should not be being used to encourage FTB’s in to this falling market.

    I imagine what they are doing is putting several mechanisms in place now, each with a minimum amount of money behind them. they’ll see which looks like it’s going to work the best, then at the end of next year really pump a load of cash at the ones they think will stabalize the market pre-election

    In the meantime expect more news/statements to crash the market.

    So far we have :-
    The flashed goverment papers predicting 10% falls
    Stamp Duty suspension – non event
    And now Darling saying how terrible things are (which once again I was saying last week was their only way forward).

    You could always post your sensible suggestions as to how they could ‘inadvertently’ crash the housing market further – Brown and Darling are sure to be reading. Your ideas today could well be next weeks headlines.

    So come on HPCers see if you can help the government get house prices down more quickly.

    Reply
    Please complete the required fields.



  • I suppose at least offering homes to FTB’s will not cost much money as I doubt any of them will be daft enough to take up this offer until at least the market has fallen another 25%.

    Reply
    Please complete the required fields.



  • Tenyearstogetmymoneyback says:

    This sounds awfully like the Shared equity schemes of the late 1980s early 1990s.

    I can’t help but wonder if they are relying on it being a Conservative Government which has to reposess these houses
    AND demand the loan be repaid in 2013.

    :- Duncan

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    1. I suppose this is part of Nulab’s scorched earth policy – waste as much money as possible now, and let the next Tory government sort out the inevitable misselling scandal.

    2. Who imagines for a second that this will work? Homebuilders like Taylor Wimpey and Persimmon are already offering interest free loans usually for 25% of the ‘value’ interest free for ten years, and have been doing so for several months to no avail.

    Reply
    Please complete the required fields.



  • There was quite an amusing story which immediately followed this one on the BBC this morning relating to scavenging fruit that has dropped to the ground in your neighbourhood. No need to waste money at the supermarkets anymore – just get your kids food from your local footpath!

    *sigh*

    Reply
    Please complete the required fields.



  • Should_of_banked_it says:

    I take it this doesn’t apply if I (one man band) built a new house and wanted to sell to a FTB’r, would the FTB’r receive the 30% from the government to pay the deposit?

    Mr New Build gives the government £49,000 (30%) towards an average priced house @ £164,000.
    The government give the £49,000 to the FTBr for his/her deposit.

    Mr New Build keeps the price high by not decreasing the house price, this is recorded at the Land registry, keeps the price high for non FTB’s who are willing to purchase next door.

    Reply
    Please complete the required fields.



  • good one, str 2007, let’s help the government with some ideas for crashing the market faster.
    They could:
    1. Voice official concern over the losses people are going to make over the next few years if they don’t try to sell now
    2. Get the BBC to run more programmes explaining the really obvious concept that if you’re selling to buy another house, that will be cheaper too so you’re not really making a loss. People who buy their next house before they’ve sold their own must be mad, unless it’s a stonking bargain – and financially they are taking a huge risk. In fact it’s surprising if they can still get financing to do this in the current climate.
    3. Get the FSA to clamp down on new mortgages eg above 80%.
    4. How about the propaganada thing they did in China when their market was overheating- they got the sheeple to adopt the mantra “I will not buy a house for 3 years”? I think it worked but then that was all based on the loyalty to the government thing and we don’t even trust ours.

    In any case, they should change the system so that once an offer is accepted it is final, as in Scotland – as mentioned in the gazundering thread previously.

    Reply
    Please complete the required fields.



  • Would this not have a downward effect on private sellers ?

    If some were to take up the offer to buy government / developer rabbit hutches, then surely the private housing market would have to drop in price to compete ?

    Reply
    Please complete the required fields.



  • @Ddsupreme

    Absolutely. This is passing favours to large scale housebuilders with excess supply, not favours to FTBs. Like so many government policies it is actually offering a poisoned chalice to the very people the policymakers say they are trying to help. Shame on the BBC for not being a little more circumspect about this crackpot plan too.

    Reply
    Please complete the required fields.



  • @Stevie Dee – youtube this – LE IENE – Test antidroga parlamentari – it’s in Italian – but apparently articles appeared in UK press, too. One in three parliamentarians drug tested proved positive. Result – an “How dare anyone ‘invade the privacy’ of a politician?” outrage in Italian media.

    Later, I will be e-mailing the British government to express my dissent. Surely there must be a petition to sign against this initiative?

    Reply
    Please complete the required fields.



  • crash bandicoot says:

    If they really wanted to crash it they would introduce a land value tax…………but then it wouldn’t look like they were “helping”.

    Reply
    Please complete the required fields.



  • a saver (currently at 15) makes a couple of valid points one of which ties in with the fact that yesterday the CML came up with proposals which (IMO) conflict with todays Government moves – see http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=172126&d=340&h=341&f=342

    CML to tackle new-build fraud
    Lee Jones – 01-Sep-2008
    The Council of Mortgage Lenders has taken steps to stamp out the current rampant fraud problem in the UK new-build sector.
    Lenders will now ask builders or developers of any newly-built, converted or renovated property to complete a new ‘disclosure of incentives’ form, highlighting any discounts or incentives that the developer has offered the buyer before the mortgage is approved.
    The CML says this will ensure that any mortgage is granted on an accurate valuation, and help prevent fraud.

    Currently developers offer the buyers discounts on new-builds, which are not admitted to the lender. This means unscrupulous buyers and developers can deceive mortgage lenders out of thousands of pounds.

    Last week buy-to-let lender Bradford & Bingley admitted to have lost £18 million in the first half of this year thanks to mortgage fraud. It says this is a problem for the whole industry, and is perpetrated by mostly property professionals such as developers, conveyancers and solicitors.

    The council hopes this directive will help reinforce lenders’ confidence in the market for newly-built property, which has fallen due to recent experience of losses and frauds.

    From today, the CML is amending its standard industry instructions to conveyancers, requiring them to get a copy of the completed disclosure of incentives form from the conveyancer acting for the developer.

    This move is backed by the Royal Institution of Chartered Surveyors, the Law Society of England and Wales, the Home Builders’ Federation, Homes for Scotland and the Construction Employers Federation.

    CML director general Michael Coogan says: “These measures to reinforce confidence in the accuracy of valuations of new-build properties will help underpin this segment of the market. This is particularly important at a time of limited funding availability for house purchase transactions.

    “In the meantime, recent lender experience means buyers of new-build properties will be expected to provide significant deposits so that lenders can manage their risks.”

    Reply
    Please complete the required fields.



  • Presumably the housing market could be ‘assisted’ by a Cabinet Minister inadvertantly leaving a consultation document on a train outlining a proposal to nationalise all unoccupied domestic property (including second and holiday homes) as a means of housing the dispossesed and those driven from their homes by social unrest.

    Just a thought.

    Reply
    Please complete the required fields.



  • This’ just gone nuts. 30% interest free loan only for 5 years? What is the point? Even the stupid shared scheme looks less retarded than this. If you buy a 25% shared equity in a house, and agree with the builder that the rest 75% can be purchased interest free within 10 years (which is what is being practiced now) – This is effective a 75% interest free mortgage free for 10 years!

    This is absurd subsidiary to property developers by tax money!

    The difference is that if you take the government loan, and you house price rises, it will be all YOUR gain. BUT, a BIG BUT, if you house price falls, it will be all YOUR loss. In a 25% shared scheme, if the price falls, because you only have ¼ stakes in it anyway, your loss is also ¼ and the developers will have to take the ¾.

    And if you don’t have any stake in the house, i.e. you don’t own a house, then developers will have to take 100% lose. And their lose is 100% your gain.

    Reply
    Please complete the required fields.



  • Ah, the inconsistency of saying they want to help FTBs (a group that wants prices to fall) by taking measures to support house prices. One has to laugh:)

    Thank-god none of this will help prop up the housing market:) I can save £1,750 on stamp duty by buying now. Or Save 10 times that by waiting a year. Let me think.

    And the other measures…given the value of the market, if their measures actually work, look out. If people started using these offers, the government will be bankrupt within a year.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>