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Written by rosalind renshaw

The Law Society has sent out a strong warning to first-time buyers to be wary about affordable housing schemes.

It warned that first-time buyers remained vulnerable to repossession.

The Society said that despite low interest rates and affordable housing schemes aimed at making it easier for buyers to get on to the property ladder, they should take careful advice first.
 
Law Society president John Wotton said: “A significant number of repossessions take place against first-time buyers who often do not fully anticipate the nature and significance of the responsibilities they are taking on. As a group they are at the greatest risk of negative equity.
 
“Having never been through the process before, first-time buyers may need a more detailed explanation of the way the transaction works and the nature of the obligations they are assuming. In many cases they may receive financial help to buy from relatives and so there may be third-party interests to consider.
 
“Many couples who are first-time buyers, especially those who are not married, need to record their respective interests in the property. Failure to do this can result in disputes, and court proceedings.”
 
The warning from the Society comes as affordable housing schemes, such as the Government’s FirstBuy initiative, and shared ownership schemes grow in popularity. Recent figures from Halifax show that such schemes now account for 13% of private and housing association sales.
 
FirstBuy offers an equity loan of up to 20% to first-time buyers, while shared ownership schemes allow first-time buyers the chance to part buy and part rent the property, increasing their share in the home through rental payments.
 
The Law Society said first-time buyers should talk through all their options with a solicitor before making any decisions.

Comments

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    Sib,

    I say: why pay a solicitor for this advice. No matter if you and I have differing views on 'the market' we, and many people like us, would give similar advice to a FTB.

    You do not need to be a legal expert to advise such 'tosh'.

    It has never changed, and it is not just the shared ownership deals etc. A buyer must know what they are signing up to if they take on a mortgage. The little 'loves' just get so excited when given a 'yes' to their new eternal debt.

    Strangely, I feel the same in respect to signing up for a franchise.

    It is a non story.

    • 10 September 2011 09:48 AM
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    Hmm, what say you Fun Boy Agent.

    Still, it's all about affordability in the short-term with no consideration of long-term implications that counts, so long as you flog-off one more prop eh?

    • 09 September 2011 14:03 PM
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    There is very strong demand for these schemes from buyers. I find that they sell like hot cakes in this otherwise difficult market. I do feel that buyers pay a little too much for their share of them, but on the other hand, the same seems to happen when they sell them on so is it too much?
    They do have many faults, but do at least allow pride of ownership which is no bad thing.
    They do allow developers to sell homes where otherwise they would not ... is that so bad? They do both allow for long-term growth and provide some cushion from short-term falls. Often buyers can, if they save, 'staircase' their share up to a higher % sometimes up to 100%
    They are NOT all bad, but a lazy uninterested buyer may come unstuck with them, but is probably of a type that comes unstuck on everything anyway.

    • 09 September 2011 13:56 PM
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    I am intrigued by this "generally spunking of hard-earned money", please send me your phone number.

    • 09 September 2011 11:19 AM
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    FFS is dead right. In a falling market the last thing an FTB should be doing is buying some one or two bedroom, shared equity, plasterboard and mdf rabbit hutch. It's madness.

    They should have a little patience, cut down on the drinking and the holidays and the generally spunking of hard-earned money and save a bloody deposit.

    Anybody who signs up to these schemes is either lazy or stupid.

    • 09 September 2011 10:59 AM
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    We've seen a few victims of these schemes through the doors. Not a lot we can do to help most of the time.

    FTBs need a bit more patience to save that deposit, these schemes have all the down-sides of renting and few of the up-sides of ownership. The only gainers are the developers.

    • 09 September 2011 10:35 AM
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    The Law society a few years ago said shared equity schemes were dangerous.

    We are seeing more and more people in distress with shared ownership/equity. They are scams designed to milk first time buyers out of all their money. They are anything but affordable and could be the buyers most costly mistake.

    • 09 September 2011 10:11 AM
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    These schemes are a scam. As prices continue to fall FTB's should just sit tight, save and buy a decent property.

    • 09 September 2011 09:03 AM
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