The country’s biggest housebuilders and lending giants are to back the mortgage indemnity scheme for new-builds, announced in this week’s Coalition’s housing strategy, as critics of the scheme increasingly voice their concerns.
Opponents say the scheme is an ill-thought-out interference in the market, and will mean taxpayers’ money being used to prop up the likes of Barratt’s house prices.
The lenders are Barclays, HSBC, Lloyds Banking Group, Nationwide, Royal Bank of Scotland, Santander, and Yorkshire and Clydesdale Banks, who between them have 80% of the mortgage market. Other lenders may also join in the scheme.
The 25 developers who have agreed to participate in the scheme include the UK’s biggest housebuilders – Barratt, Persimmon and Taylor Wimpey. Between them, they build some 60% of all new homes in the country.
The Government hopes that other builders will want to participate in the scheme, which will be available in England only.
Under the scheme, lenders will advance up to 95% LTV on new-build property for first-time and first-move buyers, but will also pay 3.5% of the value of the property into a ‘kitty’.
This indemnity fund will pay out to the lender if a property financed under the scheme is repossessed and there is a shortfall.
If the shortfall is more than 3.5%, taxpayers will pay the balance, up to a total of 9% of the total value.
But the scheme has met with a backlash from all quarters. Critics say that if it all goes wrong, the first-time buyer would lose their deposit, the developer would lose their stake, the taxpayer would lose their stake, and the bank gets the house.
Peter Ford, of estate agents Townends’ land and new homes department, said the indemnity scheme could hit the resale market on housing estates.
He said: “There is the danger that by helping new-homes developers, builders and first-time buyers, this new scheme could have the unintended consequence of actually hampering those home owners trying to sell properties in locations near to sites benefiting from this Government support.”
Others have warned that new-builds are the most vulnerable of all properties to price falls, and even with mortgage indemnity guarantee in place, buyers could still risk heavy losses.
David Bulk, of brokers BGC Partners, warned that the indemnity scheme is “financial incompetence and economic suicide”.
RICS spokesperson Michael Newey said: “The focus on new-build will not free up chains and may reduce demand for second-hand property.”
Grenville Turner, chief executive of the UK’s biggest estate agency chain Countrywide, said: “It is disappointing to see a lack of measures to assist the vast majority of home movers. A stamp duty holiday for all home buyers up to £250,000 would have been a welcome boost to the resale market and should still be considered.”
The Housebuilders Association called for the scheme to benefit smaller as well as larger developers.
Meanwhile, the revived right to buy scheme would allow council house tenants of five years’ standing to buy their homes for discounts of up to 50%.
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Comments
Chris -- I think the twit that is "rant" is posting but as FTB Dan or when he wants to be really stupid and really low, Britt 1234.
Then again he could just be out applying for the new gov scheme for young unemployed announced today.
Hmm....... No Mr Rant in this thread ................ That's odd !!
Perhaps he's gone and bought himself a house and is coming over to the dark side! :-)
Or perhaps he's just ill. :-o
Fun Boy - perfect post and funny, but not fun for that crew, you will spoil all their fun as you have just effectively made them look very, very silly when they post their continual price fall messages, as I actually think they believe they can make the market fall.
I won't wear my team shirt as I believe I can change the result of a premiership game by being in the unlucky one- completely stupid of course, but I still do it, as they do.
PeeBee
Please join 'EAY' estate agent yesterday :0
Marie: " This forum IS for Estate Agents, hence the title of the page! "
But... what about little me?
Can I not play with you Estate Agents any more? :'o(
And I fort we was fwends now. Sniff... sniff...
@Wardy T'was always the case
However I did meet a vendor yesterday with a realistic expectation over her price. I nearly fell off the chair in shock ;o)
@Fun Boy Agent
Well said!
This forum IS for Estate Agents, hence the title of the page!
My view is that we are all in the mire and we need to pull together to sort out this business we love. Negativity never helps, and us 'glass is half full' agents should gang up on the moaners who know absolutely nowt about the property game.
Amen.
FTBDan
….IM SORRY.
I decided not to pick the peanuts out of your post because I already saw how the conversation was going. At one point you made the claim that we both believe house prices are going down and that we finally see eye to eye? Erm….no we don’t. I’ve often said I have little regard for national averages and only concern myself with my own locality and nowhere will you find me advocating high houseprices. Im an agent, the lower they are the more i sell.
Fair enough, it was another poster but the sentiment is the same is it not? You yourself described this scheme as taking on excessive debt. For the record excessive debt becomes excessive when the borrower cannot pay it back. Our mate Ollie seems to have the £’s to do it so good luck to him. It wouldn’t be for me but I can see why he would go for it.
I also still maintain the FTB at the start of your name is a smoke screen. Someone who (as you said) is unsure when they want to move isn’t a ‘buyer’. The ‘buyers’ we have on our books view properties and buy them. Just because you haven’t bought before does not make you an FTB by default.
‘But that is the problem, is it not, some of you have become so implacable in your hostility to anyone you perceive to be ‘HPC’ ‘
True, you may have a point there but the truth is many HPC posts are just downright ignorant and deserve every bit of flaming they get. Anyone who says that agents are propping up the market for their own BTL portfolios is a moron and should be told such. Posters such as rant, sibleys etc rarely get hostility due to their ability to hold a debate but come on, every single post does not have to be about a crash.
@FTB Dan
You are a buffoon, and should go away.
End of rant.
I agree with Wardy,
Wardy for president.
This is not a 'house price' forum. This is not a 'banking' forum. It is a site for EA's to give and get knowledge.
Estate Agents by nature will have a 'sunny side up' nature, they will seldom respond well to doom merchants or whinging wannases.
As agents I would assume we are all aware of house price issues in the current market, but frankly, if you wish to prattle on and share your views with others, go to 'housepricecrash' and spread your bile. EA's in the main will not be interested in your views. We already know the issues and have to work in this enviroment every day.
I see you can’t bring yourself to apologize to me. Despite insisting I was saying something I was not, even though I pointed that out. But that is the problem, is it not, some of you have become so implacable in your hostility to anyone you perceive to be ‘HPC’ that you attack them for what you imagine they are saying, not what they actually do say.
“On the other hand these threads descend (as it always does) into a house price battle with HPC'ers, even arguing amongst themselves.”
No wardy, be honest. These ‘HPC’ folks as you call them make well thought out comments and then a hardcore of haters turn up and start with the personal abuse and name calling. I am not blaming you particularly, you at least have the brains to make an intelligent point when you want to, but you certainly get caught up in the mob mentality that gets whipped up. But some, and they know who they are, just start posting immediately with vile little rants.
If you want thoughtful comments and ‘a battle’ you need speak out against the people that don’t know any better than to start petty name-calling in their first post. It’s pathetic and juvenile.
PbroAgent.
So it was.......apologies.
This has always been the case has it not? I think it’s just more apparent now that there is less quality stock out there. We tend to get frustrated with the unrealistic vendors more now than ever and even more frustrated with the agents that pander to them.
On the other hand these threads descend (as it always does) into a house price battle with HPC'ers, even arguing amongst themselves. I think it’s a shame. I bet many agents read these threads that would have some useful input into the discussions that just can’t be arsed to get into a keyboard battle. Who could blame them?
@Wardy
"FTB Dan
Just the fact that you called boomers equity 'unearned' leads me to believe you have a problem with it."
Sorry 'twas me. I'm just a bit fed up of trying to sell houses for boomers for massively more than they paid for it when they don't want to reduce their asking price to more realistic levels because they "don't want to give it away".
Rant over.
Peebee - Cant ignore Brit, he started on here as Brit123 and now made it to 4, when he gets to 5 he may have somefink to say, after rantrave's mum tells him what it is.
"Ignore FTB Ollie it is obvious he is one of the trolls who tries to start arguments on HPC or MSE. Seems he has come here now."
THAT, from Brit1234, who trolls on THIS site trying to start arguments.
You couldn't make it up...
Ignore FTB Ollie it is obvious he is one of the trolls who tries to start arguments on HPC or MSE. Seems he has come here now.
As for the scheme, its crazy. It stinks of back handers from developers. It's clearly not going to help estate agents, its going to put guliable ftbs in negative equity and cost the tax payer with the repossessions when interest rates go up.
FTB Dan- your trader works for the very banks that have created this mess, he was hardly going to support an alternative view and admit hes a pratt was he!
You bin away missed you, can't you go again!?
The story so far from some fascinating posts:-
@FTB Ollie – but what happens when the interest rate on your unnecessarily high loan increases, as it will? And inflation wipes out the 10%-15% savings?
Your salary or rather spare capital must be enormous if you think you can pay off any mortgage over £50K or so in 10 years. On a repayment mortgage you pay as much capital back in the last 7 years as in the first 18 and to change that you have to make huge additional payments.
I suggest you get yourself a repayment mortgage quote for a £125K loan over 10 years but make sure no family is standing round when you read it as the rate it will make your eyeds water someone could risk drowning.
It will have to be repayment as I assume you can work out if it is interest only you won’t pay off anything unless again making massive monthly overpayments.
You mention a family home – I assume that FTBs are not so daft as to assume this scheme is going to get them a 3 or 4 bed property – are they?
£400 million scheme isn’t it - forgive me if wrong as if I am then what follows while correct is wrong if you see what I mean!!
At £125K average price for easy figures (unless all the properties are to be built somewhere like West Wales or Cumbria) that is 8 to the million or 3200 houses.
Someone remind me but isn’t the national target for new building 225,000 houses a year? The words “drop” and “ocean” come to mind here as Country Lass touched on this and my guess is with the price hikes that others have rightly said builders will add on, the average price is likely to be much closer to £175K.
That gives you 2285 properties and I’ve seen single estates with more houses on than that!!!
@FTB Bob – prices won’t crash unless the economic situation becomes so severe that the last thing you’d do is own property even if it was given to you. I believe prices will slide probably another 20% over the next 2-3 years unless an economic miracle occurs in terms of a recovery.
@Des – don’t be a twit. All this scheme does is help FTBs not the entire market and it is the entire market that needs helop and all those in chains in it. Actually this scheme is so barmy maybe I mean meerkat!!
@Pbro Agent – dead right most people under 25 don’t vote. Mind most people under 37 are now FTBs!!
@Ray Evans and Country Lass – talking sense as usual.
This scheme is complete and utter nonsense why don’t we all get tax relief back on our mortgages. Or some pledge of mortgage guarantee for us all? What is so special about FTBs and new houses - if it applied to existing properties, which it should, maybe.
The Government should be ashamed of itself for being talked into such a waste of taxpayers money, as usual by vested interests
@ftb ollie this scheme is designed to shift overpriced new build housing stock on a myriad of unfinished developments across the uk - make no mistake prices are about to fall and you as a first time buyer will be able to purchase comfortably. Save your deposit until the market bottoms out - incidently or buy now and lose your deposit as its sucked back out of the system - mortgage indeminity guarentee premiums is just hedging the shortfall that will occur if you buy now - fine if you can weather the peaks an troughs but not if you need to sell at a loss if you need to - the key that will unlock this is affordabilty and earnings to house prices at around 4 x salary otherwise you are just buying on tick on an interest only loan which is no different to renting with no capital growth. Good luck with what you do ollie i heard hartlepool was a great place to buy last year ;)
Try this C & P
I suspect it will be a long time before you see the significant gains associated with a bull market (as FTB Dan would call it). So your main consideration should not be: 'Will I make money out of this?' Rather you'd be doing something quite 'old fashioned'. You'd be buying a house not as a speculative asset but as somewhere to live.
Not my words, but they apply to you.
Buffoon
Watching, was just on the phone to a trader a moment ago, so I ran by him your line about “The current price and only the price tells you what the market is doing.” That just so happens to be identical to a line on Wikipedia.
He immediate reaction was ‘what bollocks’ and gave me several reasons why no real trader would ever say that. But the main one was how volumes and volatility are crucial to understanding a potential trade.
But then again this guy is only a trader at a major investment bank. Next to you Watching, a man that can copy and paste off Wikipedia and pass it off as his own work , well obviously he is not worth listening to. Do tell us more.
Watching, I’m not sure why the personal attack, calling me a ‘Buffon’ or how you have suddenly become an expert on trading. Perhaps you have worked in finance, it so happens that I do and while I am not a trader I have worked alongside a large number of them.
Interestingly, I do note that your new found knowledge just so happens to be almost word for word perfect with a section of a Wikipedia page here: http://en.wikipedia.org/wiki/Trend_following at the top of the Considerations sections.
I’m sure that whatever little I may have to offer, my ‘drivel’ as you put it is no match for a man that can copy and paste a section of a Wikipedia page and pass it off as their own words, indeed calling someone else a Buffon while doing so.
Still, I’m sure you will shortly start cloning my username again in an attempt to make me look bad. Not sure why it is so important to you, but then I clearly have so much to learn from you, I’m just grateful for the odd snippet here and there.
"FTB Dan
Just the fact that you called boomers equity 'unearned' leads me to believe you have a problem with it."
Wardy, again your suggesting I said things that I did not. Did you think I was behind the posts at 11:21:14 or 11:16:50, the only place where 'unearned' has been used. If you check again, your see that it was others who posted this.
@Country Lass
The scheme is designed to help FTB's. I'm a FTB. I don't make the rules.
I mentioned stamp duty because you seem to be suggesting that I hand over my hard earned for the good of the nation. I mean, going by your logic, surely the FTB stamp duty holiday is also intended for low earners?
I have also saved for years and have a substantial deposit. Saving is in my DNA. However if I can get a 75% LTV interest rate on a 95% mortgage, potentially a negative real interest rate, it makes sense to me to fill my boots.
FTB Dan
Just the fact that you called boomers equity 'unearned' leads me to believe you have a problem with it.
@ FTB Dan,
Wardy is so, so right. You are not going to be a FTB any time soon and wasn't when you populated and contaminated this forum with your drivell 6 months ago either.
You are a 'trend follower'. No more than that.
You talk like a 'stocks and shares' watcher or trader, not someone looking for a home.
One of the first rules of trend following is that price is the main concern. Traders may use indicators showing where price may go next or what it should be but as a general rule these should be disregarded. A trader need only be worried about what the market is doing, not what the market might do. The current price and only the price tells you what the market is doing.
Buffoon
And first time buyers tend to be younger people. The ones who dont generally earn the big bucks. It was more the fact that if you earn such a large amount, isnt it a teensy bit selfish to use a scheme designed to help peole who would need to save for years to be able to afford the deposit?
And who said anything about stamp duty?
The lobbyists have done a job on this.
Whichever way you look at it this scheme is a complete nonsense and it will be seen to be so in a year or two.
@ Country Lass
I think that you misunderstand the scheme. It's intended for FTB's rather than low earners. I'm a FTB.
Do you think that I should offer to pay stamp duty as well?
Wardy,
“Simply not true. I for one quite like Ollie. But then Ollie sounds like a true first time buyer, not a HPC'er pretending to be an FTB for the sake of argument. Lets face it, you’re not buying anytime soon.”
Given that we have never met I am unsure as to how you know when I will be buying, especially given that I am not certain myself. What I can tell you that being recently married and planning on a family I would very much like to buy soon, however, for reasons already made well on this thread by Country Lass, this may be delayed a year or two.
“Shouting 'it’s not fair, boomers have money they don’t deserve' won’t do you any good.”
I agree with you, but I am confused as to why you think I am making this point, I am not or have not.
“If you want my advice, spot the bottom of the market, (I reckon a couple of years) “
Again I agree with you, not certain about it being 2 years or 7, or any other number, but I am pleased to see you now believe the direction of travel is firmly on lower prices. I received a great deal of opprobrium from you personally in the past for making such a claim. But glad we now see eye to eye.
“Buy a house that suits your family, live in it, sell it at a profit. I’m sure you’ll ride that gravy train for all its worth and quickly forget you’re moral high ground.”
That would be the natural tendency, to support the position that benefits yourself. But as I am relatively early in my career that will run for decades yet, falling prices for decades will be in my favour as I trade up. Even then, I will presumably want to see my own children be able to buy, a view many in their 50/60s have now come around to.
Of course not, we're Estate Agents, not Financial Advisors!
My point is, if you feel you will be able to pay of a loan of c£120k (based on new builds round my area as a minimum) in 10 years then either you have a really good job or you have underestimated the amount you will be paying.
And if you earn enough to not blink at paying above £12k a year for the mortgage, why are you planning to take money designated to help those who may only earn £15-£16k each a year?
FTB Dan, you said:
'A certain number of EAs hate all FTBs'
Simply not true. I for one quite like Ollie. But then Ollie sounds like a true first time buyer, not a HPC'er pretending to be an FTB for the sake of argument. Lets face it, you’re not buying anytime soon.
Shouting 'it’s not fair, boomers have money they don’t deserve' won’t do you any good. If you want my advice, spot the bottom of the market, (I reckon a couple of years)
Buy a house that suits your family, live in it, sell it at a profit. I’m sure you’ll ride that gravy train for all its worth and quickly forget you’re moral high ground. If the market falls in that time then at least you took the risk, so maybe all that equity wasn’t unearned in the first place.
@Country Lass
Of course I'd want to pay it off quickly. No point dragging the whole thing out over 25 years uneccesarilly. It means that I'm free as a bird and can avoid the pitfall you mentioned earlier and pay less interest.
I don't see why that is nonsensical. I trust that your office doesn't offer mortgage advice.
So you're planning to pay off a 20-25yr mortgage in 10 years?? If that's the case, rent for a few more years and then buy whatever you want with a larger deposit!
Up until that point dear boy, you seemed to be talking sense, albeit from a different viewpoint and opinion than mine.
@Country Lass
I wouldn't really care where they were being steered. I'd sell my now secondhand house for whatever secondhand houses are going for. The finance would be payed off by then so not a factor.
More new housing is a good thing. If this scheme encourages it then that is also good.
Homeowners have just got too used to prices being inflated by scarcity and think they deserve unearned increases in equity. I'd be happy to see that mindset change.
@FTB Ollie
NEWS FLASH
Boomers vote, young FTBers generally don't.
Boomers have all the money, young FTBers generally don't.
We are paying for their retirement, yet they are passing laws to make us work longer.
They all got free university education, yet at every opportunity they hike fees.
They are living off massive amounts of unearned equity, yet they introduce "incentives" and schemes for us to pay for this equity.
Boomers trailblazed a new path in life, yet they are pulling up all the bridges behind them.
Why presicely will politicians listen to the young?
What's with all the loonies wailing about the effect on chains? Chains can help themselves by setting asking prices that somebody is willing to pay. It isnt rocket science.
They'd better get back to CBeebies and ask mummy for a cuddle.
But when you come to sell either the car, or the family home, the outstanding finance on it will dictate what you can sell for. If you owe £80k (random figure btw) on the house, then that it what you will need, at least, to enable you to move home, even if family home are currently selling for £60k.
So, at that point, in that scenario, I ask again. Would you be happy that the first time buyers are being steered away from a) your place and b)the house belonging to the people who want to buy yours when they have sold theirs?
Yes, this scheme, in the short term, will help FTB's get a roof over their heads. But what is the future cost going to be?
@Country Lass
I don't have expectations of what I may recoup. The things you mention could just be classed as costs of ownership. I bought a new car on Saturday and do not expect to get that money back when I sell. Far from it.
I don't really understand your point. The Government spends my money on lots of stuff that I don't approve of. Neither of us can predict what the climate will be in 10 years time but come that day I'll be selling a family home for whatever family homes are going for.
Just look at the elephant in the room!
Let us quit all this waffle and get on with the real stuff
LET PRICES CRASH AND WE CAN MOVE ON
Ollie, OK, so 10 years. A lot of the HPC crowd seem to think it will take that long to recover from the crash 'just around the corner.'
So in 10 years time, you are expecting the property you have been 'helped' to buy to be worth enough to cover 1. The equity 'lost' in the crash, 2. The inevitable depreciation of a new build and 3. The mark up that another FTB has realised that the house builders will add on.
But my point still stands, and the fact you sidestepped it tells me something. Ignore the timescales. When you decide to sell, are you going to be happy that the Government is using YOUR money to help people stop you moving?
@Dan
I'm not too fussed to be honest. Of course it'll depend on interest rates etc. but if I can get a 95% mortgage at the rate of a 75-80% mortgage and invest my savings elsewhere I'd be very happy. Borrowing a large sum at below the rate of inflation is not to be sniffed at.
@Anon
News flash.
1. Poential FTB's form a substantial and increasing proportion of the electorate. Get ready for us to be courted by politicians and the baby boomer viewpoint to become ignored.
2. Foreigners like me (Oliviero innit) are also a substantial and increasing proportion of the electorate etc. etc.
3. I'm just joining the homeowner party. Loans subsidised by low interest rates, taxpayers to pick up the tab if I lose my job. I believe you would say "lovely jubbly".
“I've rented and done the moving around thing. Time to settle down and glad that the Government is going to help.”
Ollie, the government are not helping you in any way that word is normally used. They are only helping you take on excessive debt. They are helping the shareholders of house builders.
This only applies to new builds, so the home builders will simply increase their prices. You need falling prices, not government subsidized debt.
Brilliant, my auto correct put anomalously rather than anonymously. I am now braced of the barrage of ‘go back to school’ abuse that will generate!
@Country Lass
3 or 4 years? Why such a short timescale? What's the point of forking out all the associated costs just to stay for that long?
With a 95% mortgage I'll be buying a home suitable for 10 years minimum. Maybe forever.
I've rented and done the moving around thing. Time to settle down and glad that the Government is going to help.
Ollie, it seems in the time it took me to post the first of the haters appeared. ‘Anon’ managed to call you a walley, a leach and a parasite. While of course such comments tell you a lot about the person making the comment, I am afraid it is rather common here. I am not sure why the hatred, I can only assume in these difficult markets the absence of more buyers exerts pressure on some EAs who in term delight in taking out their frustrations anomalously online.
FTB Ollie, You are I’m sorry to say being very naive. The reason is you are confusing what politicians say they want to achieve with what they will achieve, very different things.
If you are Barrett homes you just put your prices up 10-15% knowing that first time buyers are being subsidized. So its a big win for the corporate house builders, who unsurprisingly are the ones that came up with the idea and told the Tories how wonderful it would be. It’s also a win for the banks, as they advance a loan for 95% but are only liable for 85%, so as well as earning a higher return on loan are backed up by taxpayers for the rest.
However, the poor FTB is ‘helped’ into a large debt that they will have to carry with them for decades, and the taxpayer is subsidizing the banks and large corporate builders.
Absence this scheme and house builders would have to significantly reduce their prices, which would ultimately make banks less nervous about lending and would leave FTB’ers with less debt and better homes.
The only good thing about this policy is that it will prompt falls sooner in comparable homes in reasonable distance of new estates. As the transaction levels will drop in these older homes, and the ones that need to move will have no choice but price lower.
Incidentally, if the government really does want more homes that people under 37 can actually afford, all they need do is repeal the hugely restrictive planning laws that work in presumption of no progress. That has seen the price of land with planning permission become over 50 times the price of farmland. What they don’t need is another bung to the banks and large building companies to keep young people locked in high debt.
P.S Be prepared for a lot of ad-hominem attacks posting on this board. A certain number of EAs hate all FTBs, suggestions that you’re on benefits or at school are common, although one chap ‘Jonnie’ always likes to resort to a suggestion that you can’t get laid. Not sure why such an insult springs so readily to mind for him?
would have posted earlier but have been busy buying shares in house builders.
This helps people onto the property ladder but it does not help the market as they are buying from a builder. There is no chain that kicks in with these buyers. Seems like the govt have forgotten they make money when people move home through stamp duty.
This is the simple solution, just chuck money at the problem
@ollie
Think you spelt your name wrong should it not be walley?
I sure as hell do not want to support leeches on society like you getting on the housing market. This government are too damn quick to spend money on frivilous ideas and supporting foreigners and not looking after the electorate properly.
Go out and support yourself. This is an Estate Agent site not for the likes of you to make such inane comments.
Get a life you parasite.
FTB Ollie, so what happens 3/4 years down the line when you want to sell you house, and other FTB's are not interested in your crummy old terrace/flat when you want to recoup the money you have laid out?
This scheme is short-sighted in the extreme.
This scheme is a good idea, I can't see why so many are whinging. The population is increasing, households are getting smaller and we need more homes.
As an FTB I'd much rather buy a nice, warm, new house without dipping into my savings and at a low interest rate subsidised by the taxpayer than some crummy old ex-rental terrace/flat with botched decoration and a vendor who wants a 20% profit on the 2007 price.
Vendors/EA's need to get real. Your greed has killed the market and we are starting to find ways around you.
Fantastic news.
@Brian, as the government, you would think that they would make it their job to "get" it.
People really want to buy rather than rent, so will take this option, it has to hurt the normal market as removing more buyers at the bottom of the chain stops normal sales.
I voted Tory, but they should not interfere in stuff they just don't get! Perhaps they will dream up a pack with contract, searches, survey in to speed up the process next, perhaps…….