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Shared equity


indi
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Thinking of buying a house, but although I can get together a decent deposit, but the bank won't lend me enough to buy somewhere decent outright. It seems like the only way I'll be able to get the money for somewhere decent is to go through one of these government backed shared equity doodads, anyone done it or know anything about it?

 

The one I'm thinking of is this: http://www.islingtonwharf.co.uk/

 

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Could you not get a house share with a friend,? that way the mortgage is 50/50 or whatever each of you put in. Also all the bills would be halved, and if you got a 3 bedroom house (I'm assuming you live on your own here though) you could rent out the 3rd room bringing more money in again to pay off the mortgage.

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  • 2 weeks later...

Shared equity = where you let the govt become your pimp. Nice.

 

Better off just renting, mate.

 

The two deals that I'm considering seem pretty good really.

 

One is that you buy 70%+ and have an equity loan covering the rest, which is interest free for the first 5 years and although you can choose to pay some or all of it off at any time you don't have to pay anything for that time and afterwards you're only committed to paying the interest. The good thing about the loan bit is that because it's equity rather than actual money, if the price of the apartment goes down so does their bit, you basically just have to give them 30% of what you get for it if you sell. Anyway, that's the deal with the one I mentioned above.

 

The other one is that you can buy 50%+ and pay rent on the rest and buy it at any time, haven't looked into this one as much but it seems interesting because it'd mean that I could afford to get a bigger/more expensive place, perhaps even a 2-bed. The big question is do I want to live here?

 

http://www.designtodesign.com/storage/post_images/jul2009/1/200906/chips-by-alsop-architects/o1jna04j.jpg?__SQUARESPACE_CACHEVERSION=1246991561539

http://www.designtodesign.com/storage/post_images/jul2009/1/200906/chips-by-alsop-architects/urban-splash-cr4033-06.jpg?__SQUARESPACE_CACHEVERSION=1246991330649

 

http://www.urbansplash.co.uk/projects/chips

 

I think I like it, but I have a slight worry that in a few years it might look really ridiculous (I'm guessing that a fair few will think that now) and might be hard to sell if it does. Urban Splash are uber-trendy at the moment but their stuff might end up being the 21st Century's Brutalism, or whatever. :dontknow:

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That you cannot buy outright is due in part to schemes such as this.

 

But mainly due to bandwagon jumping morons who bought property they couldn't afford, thinking that buy-to-let/property investment was going to turn them into millionaires and who are desperately hanging on in there hoping for a miracle that's simply not going to happen. Just sell up you fuckers and let me take advantage of your foolishness!! :lol:

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Sounds like you're not 100% convinced.

 

I'll know better after I've been to see them this afternoon. I'm just aware that my taste in buildings tends not to be the same as most people as I like the weird stuff that everyone else tends to call monstrosities.

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That you cannot buy outright is due in part to schemes such as this.

 

Partly?! Not sure I'd agree with that analysis. I'd say these sorts of schemes are more a response to, than a cause of, spiralling house prices. The principle causes of house price inflation are complex but I would say the principal factors are lack of housing supply, speculative investment by Buy To Let landlords, and land price inflation (town planners and NIMBYism have a lot to answer for).

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Don't want to be buying a flat in Manchester I would've thought, be very hard to sell on. Used to work for the people that did all the marketing for ISIS, they are a pretty good company, owned by British Waterways and it'll be well built etc. Much better than Crosby Homes for examples.

 

Personally think some of the Urban Splash stuff is brilliant but could look abysmal in 20-25 years.

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That you cannot buy outright is due in part to schemes such as this.

 

Partly?! Not sure I'd agree with that analysis. I'd say these sorts of schemes are more a response to, than a cause of, spiralling house prices. The principle causes of house price inflation are complex but I would say the principal factors are lack of housing supply, speculative investment by Buy To Let landlords, and land price inflation (town planners and NIMBYism have a lot to answer for).

 

Lax credit, BTL mania and planning restrictions were of course the main drivers. However, shared equity allows developers to base asking prices and land values (how much they'll pay) on not the salary of potential buyers, but the salary + government subsidy - thus inflating asking prices, land values and placing an artificial floor under new build.

 

 

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Don't want to be buying a flat in Manchester I would've thought, be very hard to sell on. Used to work for the people that did all the marketing for ISIS, they are a pretty good company, owned by British Waterways and it'll be well built etc. Much better than Crosby Homes for examples.

 

Personally think some of the Urban Splash stuff is brilliant but could look abysmal in 20-25 years.

 

Do you say that because of how much there is about or half-built? It's a bit of a worry, but when things pick up again that'll not be such a problem. Also, it's not like I can buy something somewhere else, this is where I live and work, how it compares to elsewhere is kinda irrelevant given that. :/

 

You're right about ISIS the quality of their building looks considerably better than a lot of the other stuff I've seen and the whole plan for that area will be good if it all gets done, kinda like a new version of Castlefield, which is probably the nicest bit of the city centre to live in at the moment.

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Aren't house prices due to fall in the UK? Last I read, the fundamentals, such as the rent and price ratio, are still off historic norms, so a correction is definitely due. If you're not in a rush, indi, then hold off until the end of the year.

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Aren't house prices due to fall in the UK? Last I read, the fundamentals, such as the rent and price ratio, are still off historic norms, so a correction is definitely due. If you're not in a rush, indi, then hold off until the end of the year.

 

All indications are that the housing market is starting to see growth again, so I'm not sure that now isn't just the best possible time to buy. That said, I do think that you need to be careful when looking at buying 2 bedroom flatted accommodation (of which there is now a surfeit in urban regeneration areas across the UK). It's not going to have good resale value.

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Don't want to be buying a flat in Manchester I would've thought, be very hard to sell on. Used to work for the people that did all the marketing for ISIS, they are a pretty good company, owned by British Waterways and it'll be well built etc. Much better than Crosby Homes for examples.

 

Personally think some of the Urban Splash stuff is brilliant but could look abysmal in 20-25 years.

 

Do you say that because of how much there is about or half-built? It's a bit of a worry, but when things pick up again that'll not be such a problem. Also, it's not like I can buy something somewhere else, this is where I live and work, how it compares to elsewhere is kinda irrelevant given that. :/

 

You're right about ISIS the quality of their building looks considerably better than a lot of the other stuff I've seen and the whole plan for that area will be good if it all gets done, kinda like a new version of Castlefield, which is probably the nicest bit of the city centre to live in at the moment.

 

Aye supply massively outstrips demand i would've thought currently in Manchester, same as Leeds. Everyone got a bit carried away during the boom. I'd be wary of what they say they are going to get as other tenants too. The place i used to live in Leeds (www.clarencedock.co.uk) were very slow in getting retail/leisure tennants to move in. I don't know enough about Manchester to decipher whether they'd be able to keep tennants happy if they do get them. Is Ancoats already a popular area or are they trying to rebrand and get people to go there?

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Aren't house prices due to fall in the UK? Last I read, the fundamentals, such as the rent and price ratio, are still off historic norms, so a correction is definitely due. If you're not in a rush, indi, then hold off until the end of the year.

 

All indications are that the housing market is starting to see growth again, so I'm not sure that now isn't just the best possible time to buy. That said, I do think that you need to be careful when looking at buying 2 bedroom flatted accommodation (of which there is now a surfeit in urban regeneration areas across the UK). It's not going to have good resale value.

 

Minor growth (I've read 1-2%, maximum) which means that if you could invest in something liquid which has a higher ROI than 2%, you should do that. Unless, of course, buying a house is a real priority for you.

 

The price:rent ratio is still off historic norms, as I've said, and then you have the upcoming end of government stimulus which will have a contractionary effect on the economy. There has been a serious misallocation of economic resources into the housing industry since 2004 so it's going to experience a general cooldown/stabilisation period, which means that you should preferably invest in something else in the meantime (equity, maybe). You'll also have a likely increase in interest rates at the end of the year which might spark a few more foreclosures, but I'm not sure of the percent of UK mortgages which have an adjustable rate. I know that it's a bad thing and not something that you should be hoping for, but the more foreclosures there are, the lower the price of new houses will be because of the greater supply of old housing in very good condition. The housing situation in the UK is better than it is in America but you should still preferably wait. IMO, of course.

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I've looked at shared equity, but it always ends up costing more than buying a cheaper place outright. The mortgage plus rent on the bit you don't own, plus service charge and that makes it really expensive from the examples I've seen.

 

Problem is, they always seem to be really expensive flats in the first place. I don't want to buy 50% of a 300k apartment, I want to buy 50% of a 100k one. Then it would really be for people who can't afford to buy.

 

I don't think the scheme has delivered in practice what the policy intention was. 

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That's true, I would never have considered buying the ones I've seen at the list price, I am seriously thinking about if it's actually a good deal or it just seems like a good deal.

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