Government Help to Buy Scheme

[sam_b]

Hi,

I have lived in many new builds and they are smaller than comparable older houses (same number of bedrooms and same price). It is also VERY rare that you can extend or add to a new build as there won’t be room to. So not much chance of adding value.
They are usually overpriced, and I know many people caught out in the over inflated prices, especially if you try to sell when they are still building. If the developer is offering you ‘free’ iPads etc you can be sure that you will be paying for this for 20 years via your mortgage and that is frankly crazy. My DHs stepdaughter was offered this package and it was very cynically put together to appeal to youngsters.
Help to buy, as someone else said, is a very good deal for the government and builder,but rarely for the buyer. If you can afford the deposit without - don’t even think about it. It is highly likely that you will be trapped in your house, with little, if any equity for years.

Good luck.

[wobblywibbly]

thanks everyone for the advise and comments, we are mulling over the options at this stage but hope to be in our own home this summer after 12 years of renting all over the country

[CarolynU]

One thing that no one has mentioned that often applies to new builds is the estate management charges if the developers at the end of their builds appoint a managing agent to maintain any common areas. These charges are completely unregulated. So the council don’t cut the grass verges or repair any park equipment that might form part of the area, you do through charges levied by these agents. This is like a license to print money. There are many many unscrupulous managing agents around who employ their own workers and charge huge fees and adding on additional fees seemingly unregulated and this is just sub divided between the houses on the new build. These fees are often hidden until after you have committed to buying and even afterwards. I’m not saying that all new developments have these or that all agents are like this, but do some research. Many folks have been caught out.

[JudyC]

My son had the Help to Buy scheme for his flat just over 5 years ago. It was a fairly quick decision to buy so he hadn't got much savings for a deposit. The flat was the last one to be sold and he got it at a low price. He wants to move to a small house this year so is saving up. His flat hasn't really increased much in value, but at least he hasn't lost. Help to Buy was very handy to help him get on the property ladder

[catherinesian]

When people say 'new builds are small and overpriced' it obviously means in comparison with similar, older houses. Obviously if you're willing to pay £700k for a 4 bed detached house (the price for ones around us!) it won't be 'small' but it will be significantly smaller than what £700k could get you for a 'old' house.

The fact that Bev saved £40k on a 'new build' that was a few years old proves the point that they really are overpriced and you are likely to lose equity/ not make as much equity. The person selling that house would have been in negative equity.

[penguin19]

Originally Posted by CarolynU

One thing that no one has mentioned that often applies to new builds is the estate management charges if the developers at the end of their builds appoint a managing agent to maintain any common areas. These charges are completely unregulated. So the council don’t cut the grass verges or repair any park equipment that might form part of the area, you do through charges levied by these agents. This is like a license to print money. There are many many unscrupulous managing agents around who employ their own workers and charge huge fees and adding on additional fees seemingly unregulated and this is just sub divided between the houses on the new build. These fees are often hidden until after you have committed to buying and even afterwards. I’m not saying that all new developments have these or that all agents are like this, but do some research. Many folks have been caught out.

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Agree with this. We almost bought a new build near us, but in the end we didn't quite like the location so decided against. That development have been caught by the above and it's really put a lot of people into a difficult position, plus now they really struggle to sell their houses for anywhere near what they brought for.

Saying that, I have a number of friends who have had great success with their new builds, and I think it's very hard to pinpoint one developer etc as it seems to mixed.

[sam_b]

Originally Posted by penguin19

Agree with this. We almost bought a new build near us, but in the end we didn't quite like the location so decided against. That development have been caught by the above and it's really put a lot of people into a difficult position, plus now they really struggle to sell their houses for anywhere near what they brought for.

Saying that, I have a number of friends who have had great success with their new builds, and I think it's very hard to pinpoint one developer etc as it seems to mixed.

See more...

I agree - my first new build in 2000 I paid 99k (4 bed detached!) and sold 5 years later for 215k - but that was the housing market back then - we all enjoyed huge rises. My next one I bought at 350k and luckily sold 18 months later for 355k because we had picked a good plot. Our neighbours in the same house style took 2 years to sell and lost 50k on it! We were so lucky - it was a great house in a truly awful area and we got out just in time.
I then bought a new build which was a barn conversion and that made about 20k after 5 years.
My current house is actually very similar to my first house and was built around the same time. Compared to new builds very close to us, this house is MUCH bigger and has more land - and that change has happened in almost 20 years. Don't get me wrong, compared to an older house, this has much less land and room, but new, new builds get increasingly smaller and you can make a huge loss on them...something that the brochure will never point out.

Bottom line, if you like the house and area you will be fine. But if you are looking for a 'step' on property ladder, new build may* be a poor choice as they rarely increase in value these days - and if you don't own all of it and you don't get help to buy on the next one - how do you afford a bigger house after paying back your 20% when sold?

[catlady]

Just wanted to add that the 20% you pay back is based on the market value at the time you either sell or re mortgage. So if the property market crashes and your property is worth less than when you bought it, you pay back less.

Obviously it has to be verified by an independent valuer you can't just sell it for less!

Plus at year 6 you start paying interest linked to inflation on the loan (if you don't obviously pay it off?), the interest increases each year until year 10. Below is an example based on an equity loan of £40,000. (The £12 and £1 is the yearly management fee?). The last amount is the monthly cost you will need to payback from year 6.

1 £40,000 6% 0% £12 £1
2 £40,000 6% 0% £12 £1
3 £40,000 6% 0% £12 £1
4 £40,000 6% 0% £12 £1
5 £40,000 6% 0% £12 £1
6 £40,000 6% 1.75% £712 £59
7 £40,000 6% 1.86% £756 £63
8 £40,000 6% 1.97% £800 £67
9 £40,000 6% 2.08% £844 £70
10 £40,000 6% 2.21% £896 £75