"Help to Buy" scheme - storing up trouble?

I've recently learned that I'm eligible to participate in the Governments Help to Buy (HTB) scheme - which will lend you 25% of the purchase price (40% in That London) for properties valued up to £600k.
Interest free for five years, new build only, interest starts in year 6.

On the face of it, it looks awesome - a boost from HMG at a very favourable interest rate.

I've looked at some of the properties in one area I'd consider, and it strikes me that as new build, the actual premises aren't big, the plots are small and the prices seem to be inflated when you compare to what you could get for the same price sans HTB.

I also note that the major housebuilders are making record profits, which I do not think is a coincidence.

Having given the matter some consideration, I think that anyone purchasing with HTB is storing up problems. The scheme is due to end in a few years, and if you're paying a premium / inflated price because of HTB, you'll have problems offloading the property at a profit when you come to seel. the loan from HTB has to be repaid, at a 5age value equal to the amount lent in the first place. Doubled in value? Double the loan. But halved? So does to HTB loan.

HTB looks to em like its doing two things, other than allowing people to buy a more expensive property than they otherwise would.

1. Its transferring Government money to the P&L of the major housebuilders.
2. Its causing a house price bubble and we know how the bubble story ends.

I do think if you're looking to by a home, rather than looking to buy an asset that you happen to live in, HTB can make sense - but you'll pay over the odds. But if you're buying now in the expectation of trading up in a few years, I think you'll struggle to get a decent sale prices as you've paid over the odds "now" and the scheme isn't available to a person looking to buy your home in the future.

Couple of examples below, with and without HTB.


£570k with HTB: Check out this property for sale on Rightmove!
£mile or two away, £575k no HTB: Check out this property for sale on Rightmove!
 

MrBane

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Almost all housing developers in the last fifteen to twenty years were recording record profits due to HtB artificially boosting the market. It's the only reason some of them are still in business.

You're always far better (I feel) buying an older house (pre 1990) from a reputable name - back when standards were higher in terms of space and ground allocation and it's been around long enough to have been wear tested.

For example, modern Cala houses are a crock of ******* shit. Cala houses around my area from pre-1990 are big, well proportioned and generously gardened as Cala were still cared about their reputation then.

The really interesting point about any new build, is that if you live in a new build social housing, it will have the most advanced components in terms of windows, doors, etc due to the legislative requirement to meet the Secure by Design standard. Yet the private house across the other side of the development that costs £800k for five beds will have the cheapest and most low-tech stuff in it.

Lots of people here rushing to buy new build and I think they're all in for a shock when the values dip. I checked Rightmove for their sold prices in a street and there's a good few from another development where resale prices were far below the original purchase price.
 
And here was me thinking that you were some sort of financial whizzkid raking in the dosh.

Or was it a short burst of runaway gums ?
I'm not a mortgage adviser.

I do have two mortgages, arranged by a chum of mine.
 
Almost all housing developers in the last fifteen to twenty years were recording record profits due to HtB artificially boosting the market. It's the only reason some of them are still in business.

You're always far better (I feel) buying an older house (pre 1990) from a reputable name - back when standards were higher in terms of space and ground allocation and it's been around long enough to have been wear tested.

For example, modern Cala houses are a crock of ******* shit. Cala houses around my area from pre-1990 are big, well proportioned and generously gardened as Cala were still cared about their reputation then.

The really interesting point about any new build, is that if you live in a new build social housing, it will have the most advanced components in terms of windows, doors, etc due to the legislative requirement to meet the Secure by Design standard. Yet the private house across the other side of the development that costs £800k for five beds will have the cheapest and most low-tech stuff in it.

Lots of people here rushing to buy new build and I think they're all in for a shock when the values dip. I checked Rightmove for their sold prices in a street and there's a good few from another development where resale prices were far below the original purchase price.
The flat I now own was built in 1976 by a respected local builder.
I didn't know the last bit when I started buying it as I either bought it or was out on my ear but I have been congratulated several times on making a good choice.
I have been in modern starter homes at far more than my flat, they are tiny in comparison.
 
New builds now are rabbit hutches with the absolute minimum outside space they can get away with (Fareham Borough Council require 11 metres of garden space and that's exactly what you'll get). Older houses may need more maintenance but the size and generally the sound proofing is much better.
 
New builds now are rabbit hutches with the absolute minimum outside space they can get away with Fareham Borough Council require 11 metres of garden space and that's exactly what you'll get). Older houses may need more maintenance but the size and generally the sound proofing is much better.
I live in a 2 story 4 flats block.
There are 8 such blocks (some are blocks of 6) making up 38 flats in grounds that with modern builds could easily hold 200+ new built houses. The grass around the blocks is easily 10 times the flats ground area.
I am very happy where I am.
 
Almost all housing developers in the last fifteen to twenty years were recording record profits due to HtB artificially boosting the market. It's the only reason some of them are still in business.

You're always far better (I feel) buying an older house (pre 1990) from a reputable name - back when standards were higher in terms of space and ground allocation and it's been around long enough to have been wear tested.

For example, modern Cala houses are a crock of ******* shit. Cala houses around my area from pre-1990 are big, well proportioned and generously gardened as Cala were still cared about their reputation then.

The really interesting point about any new build, is that if you live in a new build social housing, it will have the most advanced components in terms of windows, doors, etc due to the legislative requirement to meet the Secure by Design standard. Yet the private house across the other side of the development that costs £800k for five beds will have the cheapest and most low-tech stuff in it.

Lots of people here rushing to buy new build and I think they're all in for a shock when the values dip. I checked Rightmove for their sold prices in a street and there's a good few from another development where resale prices were far below the original purchase price.
Don't forget that the price of a new build is swollen due to the developer recovering the cost of the land on which it sits.

Subsequent sales of the property don't need to factor that it in to any further sale price.
 
As you say, HTB, shared ownership or indeed any scheme that makes something appear easier to buy will always inflate the price of that thing because more people can buy it who otherwise would not be able to. You only have to look at the car industry where 90% of new cars bought on PCP schemes, hence the 60k Rangey bought by Mr Average Punter on 30k a year and squeezed proudly on the paved over front garden of his 250k house.
HTB and PCP are probably the next mis-selling scandals.
My only regret is I never took out PPI
 
New builds now are rabbit hutches with the absolute minimum outside space they can get away with (Fareham Borough Council require 11 metres of garden space and that's exactly what you'll get). Older houses may need more maintenance but the size and generally the sound proofing is much better.
And the quality of workmanship is much better, especially what you can't see. For example, the blockwork in the attic of my 2004-built house is a shocker - sloppy mortaring, damaged corners etc. And the roof timbers all held together with those metal nail plates. By contrast my parents' old 30s-built house has properly trowelled mortar between the courses in the loft and the roof timbers were all mitred and tenoned together.
 
I live in a 2 story 4 flats block.
There are 8 such blocks (some are blocks of 6) making up 38 flats in grounds that with modern builds could easily hold 200+ new built houses. The grass around the blocks is easily 10 times the flats ground area.
I am very happy where I am.
Nice. Do you each have an area of grass that is your 'garden'?
 
As you say, HTB, shared ownership or indeed any scheme that makes something appear easier to buy will always inflate the price of that thing because more people can buy it who otherwise would not be able to. You only have to look at the car industry where 90% of new cars bought on PCP schemes, hence the 60k Rangey bought by Mr Average Punter on 30k a year and squeezed proudly on the paved over front garden of his 250k house.
HTB and PCP are probably the next mis-selling scandals.
My only regret is I never took out PPI
Thus making local flooding more likely.
 
Nice. Do you each have an area of grass that is your 'garden'?
No. I am not a gardener anyway but the grounds and flats are managed thus grass cut regularly.
This does cost me £1,100 pa but includes insurance and the outside flat maintenance.
Plus £5.00 pa ground rent.
I have seen some photos of before this happened and some of the flats were surrounded by prairie land.
However a number of people have turned parts into private (but not fenced off gardens) and this improves the whole area.
I have lived here since 1986 and so far have had only one nuisance neighbour.
 
Don't forget that the price of a new build is swollen due to the developer recovering the cost of the land on which it sits.

Subsequent sales of the property don't need to factor that it in to any further sale price.
I gather usual practice is to buy the land on which the property has been built...
 
I'm not a mortgage adviser.

I do have two mortgages, arranged by a chum of mine.
greedy bugger.

I took advantage of buying cheap near me, and doing up. I could live in the block during the week and rough it at the weekend.

then I sold up.

to buy my rather nice rural pile I liquidated all savings, including my kids, and got a dirt cheap mortgage. Overpaid by £200 a month which saw my mortgage interest drop by £1+ a month.

Did some diy and then paid off the mortgage with my lump sum.

splendid.

I had to save lots. No post Op splurging of bonus and spare cash.
 
to buy my rather nice rural pile I liquidated all savings, including my kids, and got a dirt cheap mortgage.
Middle Eastern buyer for the kids? How many camels each?
 

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