First-time buyers who used Help to Buy to get on the housing ladder are faced with such large debts when the interest-free period of the loan ends that they are moving back into rented accommodation.
The claim was made in a round table – or property hub – of conveyancers, agents and brokers in Southampton.
Attendees heard that the typical pay-back for a first-time buyer in the area is around £80,000 when the five years are up.
Two property hubs were put on last week by tm group, in Southampton and Northampton.
Help to Buy proved a thorny issue at both, with suggestions that the scheme has inflated new-build prices to the maximum amounts that the Government will lend.
The scheme was also said to have “paralysed” the resale market, and to be central to what is seen as the Government’s “obsession with new housing”.
Conveyancers also expressed exasperation that people who had purchased leasehold houses often portray themselves as victims, when the lawyers said they had strongly advised them against buying such properties.
However, the view was that people are so obsessed with becoming home owners that they went ahead anyway.
Pre-sale packs were also discussed, but the view was that vendors are simply not interested in being sale-ready, and often give wrong information, making such packs a waste of time.
Each of the TM property hubs has been chaired by Clare Yates, senior business development manager at the business and well known for her former work as an estate agency trainer.
The next hubs will be held in various towns across the country starting in the New Year. Agents who might be interested in putting themselves forward to speak in what are clearly fiery industry events can email event organiser, Hannah Dukes on hannah.dukes@tmgroup.co.uk”
Seems like a great little headline grabber. I would need to see some seriously compelling evidence that it was cheaper to rent than continue with the mortgage when the interest on the HTB loan kicks in. What happens with the property? Can’t sell, so what? Just leave it empty and pay both mortgages and rents or be repossessed. Doesn’t ring true. I detest HTB but I just don’t see this claimed renting scenario as remotely realistic.
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“Attendees heard that the typical pay-back for a first-time buyer in the area is around £80,000 when the five years are up.”
But you don’t pay back the loan after the 5 years, just when you sell. If the typical equity amount is now £80,000 then the additional costs each month is around £100 so unlikely to cause someone to move out. If you are moving out to get a bigger place then again I don’t see how HTB has hit you, assuming house price growth after the last 5 years you pay off the loan from the value of the property and you take your nice little bonus from the growth in your deposit amount…
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Not quite…you have a choice after the initial period to pay of the H2B loan and regain 100% ownership, or the Govt. can retain its % share in the property, payable on sale (with a ‘floor’ to account for negative equity).
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