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Castlevania

Persimmon and Help To Buy

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So everyone’s favourite house builder Persimmon is in a spot of bother. They may lose the right to sell overpriced houses under the Help to Buy scheme.

https://www.google.co.uk/amp/s/www.independent.co.uk/news/business/persimmon-house-building-contract-help-to-buy-james-brokenshire-a8793181.html%3famp

ouch!

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4 minutes ago, One percent said:

Anyone buying a new build from one of the big builders wants their head felt. 

Bloke at work has a two year old 'new-build', the builders are always round fixing stuff, unfortunately for them he knows his stuff (engineer) so makes sure they do.

This week they were back to fix a large radiator that has pulled its brackets out of the cardboard walls.

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Probably a bit late now considering how long this has been going on. But I suspect it's a load of bollocks and will end up giving them more cash to build slightly better houses

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1 hour ago, Chewing Grass said:

Bloke at work has a two year old 'new-build', the builders are always round fixing stuff, unfortunately for them he knows his stuff (engineer) so makes sure they do.

This week they were back to fix a large radiator that has pulled its brackets out of the cardboard walls.

What's an Engineer doing buying a new build...or does he just like the company of tradesmen?! :-)

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2 hours ago, One percent said:

Anyone buying a new build from one of the big builders wants their head felt. 

I'm upvoting you and also going to add that I am buying a new build using help to buy to access the shared equity but not take out a mortgage. It's £202,500 but really only worth £160k (imo). Someone correct me if I'm wrong (Don't worry I did) but the housing developer takes the hit on their equity if the market corrects say 20% so I'd stand to lose a maximum of £10k on my £50k cash purchase of 25% and they lose £30k. My rent for their portion is only £375 (including buildings insurance and service charge) and I don't have to suffer insufferable landlords. My tenancy is assured basically. If they increase the rent massively (linked to RPI) it'll negatively effect the value and their 'profit' so that should at least keep a lid on things. 

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2 minutes ago, longtomuranium said:

I'm upvoting you and also going to add that I am buying a new build using help to buy to access the shared equity but not take out a mortgage. It's £202,500 but really only worth £160k (imo). Someone correct me if I'm wrong (Don't worry I did) but the housing developer takes the hit on their equity if the market corrects say 20% so I'd stand to lose a maximum of £10k on my £50k cash purchase of 25% and they lose £30k. My rent for their portion is only £375 (including buildings insurance and service charge) and I don't have to suffer insufferable landlords. My tenancy is assured basically. If they increase the rent massively (linked to RPI) it'll negatively effect the value and their 'profit' so that should at least keep a lid on things. 

I don’t have a clue how it works but don’t you have to pay back the help to buy portion within five years?  Or is that a different scheme?  

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39 minutes ago, One percent said:

I don’t have a clue how it works but don’t you have to pay back the help to buy portion within five years?  Or is that a different scheme?  

This is a different scheme. You have the option to staircase I.e. buy more equity, not an obligation though and no I won't ;) 

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48 minutes ago, MrXxx said:

What's an Engineer doing buying a new build...or does he just like the company of tradesmen?! :-)

Lazy fucker, thinks new-builds are less work, plus as a scouser loves complaining, will be after compo next.

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11 hours ago, longtomuranium said:

I'm upvoting you and also going to add that I am buying a new build using help to buy to access the shared equity but not take out a mortgage. It's £202,500 but really only worth £160k (imo). Someone correct me if I'm wrong (Don't worry I did) but the housing developer takes the hit on their equity if the market corrects say 20% so I'd stand to lose a maximum of £10k on my £50k cash purchase of 25% and they lose £30k. My rent for their portion is only £375 (including buildings insurance and service charge) and I don't have to suffer insufferable landlords. My tenancy is assured basically. If they increase the rent massively (linked to RPI) it'll negatively effect the value and their 'profit' so that should at least keep a lid on things. 

OK, but what about when you come to sell?...shared equity properties are about as popular as a dose of the clap...I can see your logic, SE is between renting and owning with the advatages of the latter, but seems to carry the disadvantages of both.

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44 minutes ago, MrXxx said:

OK, but what about when you come to sell?...shared equity properties are about as popular as a dose of the clap...I can see your logic, SE is between renting and owning with the advatages of the latter, but seems to carry the disadvantages of both.

When it comes to selling, the housing association market the property for the first six weeks then you are free to use your own estate agents and/or leave with the them. I've only got £50k tied up  and that's given me a property with a very affordable, unleveraged (unmortgaged) home - fifteen minutes walk from the centre of a cathedral city, that I can decorate as my own. Financially, all the scenarios stack up. A 50% correction I lose £25k over ten years (£200 a month say). If HPI hadn't been pumped with these schemes and it was selling for close to its true value (£160k) and assuming I could get a mortgage then a 30% correction would see all but £2k of my equity wiped out. My losses are capped at £50k and that would only happen if the property became worthless. At that point I walk away. 

 

Edited by longtomuranium

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13 minutes ago, Castlevania said:

It’s a glorified council house. You just have to buy a small percentage and be responsible for all upkeep. In return you get a low rent and a tenancy for life.

This ^ councils up and down the country are falling over themselves to make our limited council houses stock available to gimmigrants and not the people paying their way and taxes that would ordinarily fund social housing instead they're too busy emptying our bins once a fortnight so that element has been privatised.

Edited by longtomuranium

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6 hours ago, Castlevania said:

It’s a glorified council house. You just have to buy a small percentage and be responsible for all upkeep. In return you get a low rent and a tenancy for life.

Yep.

As Tom only wants it for a limited time he's fine, no new roof or heating system, plus he's right in that any housing crash only affects him to the extent of his equity share. Meaning 30% fall on the whole house he only loses on his £50k so £15k.

Agree about some difficulty to sell but a smaller participation is going to be easier than 60% for example.

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7 hours ago, longtomuranium said:

When it comes to selling, the housing association market the property for the first six weeks then you are free to use your own estate agents and/or leave with the them. I've only got £50k tied up  and that's given me a property with a very affordable, unleveraged (unmortgaged) home - fifteen minutes walk from the centre of a cathedral city, that I can decorate as my own. Financially, all the scenarios stack up. A 50% correction I lose £25k over ten years (£200 a month say). If HPI hadn't been pumped with these schemes and it was selling for close to its true value (£160k) and assuming I could get a mortgage then a 30% correction would see all but £2k of my equity wiped out. My losses are capped at £50k and that would only happen if the property became worthless. At that point I walk away. 

 

OK not trying to `piss on your bonfire` but you also a) have a smaller pool of buyers for SE, b) have to add an additional discount because of this. In addition you have forgotten to include the opportunity value of the £50k over a 10 year period, easily 5% and compounded...and at the end of the 10 years you can sell the equities immediately, can you do that will a SE house?

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P@longtomuranium I hope I'm incorrect but I did read somewhere (maybe on tos) that Housing Associations get sniffy about potential shared ownership buyers wanting to pay cash for the owned portion. It beggars belief why this is the case as these buyers would be less risky than those having to rely on a mortgage. Anyhoo, good luck. :)

Thinking about it, I might  persue this option myself on a 1 or 2 br house. :/ 

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3 hours ago, MrXxx said:

OK not trying to `piss on your bonfire` but you also a) have a smaller pool of buyers for SE, b) have to add an additional discount because of this. In addition you have forgotten to include the opportunity value of the £50k over a 10 year period, easily 5% and compounded...and at the end of the 10 years you can sell the equities immediately, can you do that will a SE house?

If the market dropped even only 20% that'd make it an affordable option without H2B shared equity and after six weeks with the association I'd be able to use the normal tools for selling. Estate agents etcetera 

It's only because of the cheap rent that I can afford to put £240p/month into my SIPP and together with what's already there I'm aiming (bold) to have £100k in 10 years time. I've done it before I can do the same again. Not much point having opportunities when I haven't got a roof over my head. I've ordered a gigantic 65" TV that'll go on my wall and I don't even watch the telly - I'm kitting the living room out to be my office, my study and trading room - spent so much in John Lewis yesterday that when it came to setting up the delivery details the salesman mistakenly put me down as 'Dr' on the drop-down - I made him change it to HRH. What does that tell you about doctors?! I'll post a picture when it's done.

1 hour ago, UmBongo said:

P@longtomuranium I hope I'm incorrect but I did read somewhere (maybe on tos) that Housing Associations get sniffy about potential shared ownership buyers wanting to pay cash for the owned portion. It beggars belief why this is the case as these buyers would be less risky than those having to rely on a mortgage. Anyhoo, good luck. :)

Thinking about it, I might  persue this option myself on a 1 or 2 br house. :/ 

You are correct! They are snotty and I had to have a meeting with their mortgage advisor who agreed that I was mortgageable as most of the income received is child maintenance and they can only count 60% as part of the multiplier. I told him what I thought of the housing market and before he left he said to me that he agreed "with everything I was saying". 

Thank you @UmBongo

Edited by longtomuranium

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11 hours ago, longtomuranium said:

If the market dropped even only 20% that'd make it an affordable option without H2B shared equity and after six weeks with the association I'd be able to use the normal tools for selling. Estate agents etcetera 

It's only because of the cheap rent that I can afford to put £240p/month into my SIPP and together with what's already there I'm aiming (bold) to have £100k in 10 years time. I've done it before I can do the same again. Not much point having opportunities when I haven't got a roof over my head. I've ordered a gigantic 65" TV that'll go on my wall and I don't even watch the telly - I'm kitting the living room out to be my office, my study and trading room - spent so much in John Lewis yesterday that when it came to setting up the delivery details the salesman mistakenly put me down as 'Dr' on the drop-down - I made him change it to HRH. What does that tell you about doctors?! I'll post a picture when it's done.

You are correct! They are snotty and I had to have a meeting with their mortgage advisor who agreed that I was mortgageable as most of the income received is child maintenance and they can only count 60% as part of the multiplier. I told him what I thought of the housing market and before he left he said to me that he agreed "with everything I was saying". 

Thank you @UmBongo

Well you've certainly thought it through, so good luck with it...I don't profess to know all the answers, and if I did I would have bought 15 years ago! :-)

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From the So-Called BBC

https://www.bbc.co.uk/news/business-47368308

Profits have topped £1bn for the first time at housebuilder Persimmon, which was caught in a pay row last year and is under scrutiny over its continued involvement in the Help to Buy scheme.

Annual profits jumped 13% to £1.091bn, up from £966m in 2017.

The firm also said its interim chief executive, Dave Jenkinson, would now take on the role permanently.

His predecessor, Jeff Fairburn, left last year following controversy over his £75m pay package.

 

not doing too shabbily then. 

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2 hours ago, One percent said:

From the So-Called BBC

https://www.bbc.co.uk/news/business-47368308

Profits have topped £1bn for the first time at housebuilder Persimmon, which was caught in a pay row last year and is under scrutiny over its continued involvement in the Help to Buy scheme.

Annual profits jumped 13% to £1.091bn, up from £966m in 2017.

The firm also said its interim chief executive, Dave Jenkinson, would now take on the role permanently.

His predecessor, Jeff Fairburn, left last year following controversy over his £75m pay package.

 

not doing too shabbily then. 

The inverse to this is that people have taken on more than £1,000,000,000 extra in deferred loans by buying in a Help to Prop-up housing market and from just one house builder alone. It's usury, while it may not be unreasonable levels of interest rates (yet) the debt is and that has to be paid back. Money taken from the real economy will do more damage over the long term... say 30 years. Death by a thousand cuts. 

I'm not anti-capitalism either - far from it.

Edited by longtomuranium

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On 26/02/2019 at 12:19, Castlevania said:

Their profit margins are obscene

Persimmon figures (rough and rounded to ease the maths and understanding) one of the UK largest property builders …. 20,000 per year (actually around 17,000)

Profit for 2018 £1bn.

Built 20,000 new properties.

Land bank (plots) 100,000

Average sale price £250,000.

Profit per new property £50,000.

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