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AIBU?

to take legal action over barrat homes "dream home" scheme that has screwed up my life

268 replies

twojobsjane · 25/04/2015 09:27

Back in 2007 we really needed to get a secure house after several very bad rented experiences. We didn't have a deposit so we opted for a scheme with barrat homes where they lent 25% and we got a normal mortgage for 75%/from the Halifax.

We knew at the time that after 10 years we would need to pay back the 25% but were assured by several people that it would increase in value and so could just remortgage with the equity to pay this off.

Fast forward 8 years and the house is now worth 80k less than we paid and we have no equity in the property.

Now where this gets dodgy is barret homes legal stuff say we either have to pay back the original sum borrowed or 25% of the current value, whatever is higher! So they win either way if it goes up or down.

Aibu to think this is very shady practice and I should take legal advice?

OP posts:
Perfectlypurple · 25/04/2015 09:30

I don't think it is dodgy. You borrowed a certain amount, they wouldn't risk you paying back 25% of the value after ten years because if this scenario. You have to pay back what you borrowed.

Was it a financial advisor who told you to not save to pay this back and rely on the equity?

chantico · 25/04/2015 09:30

We're the T&C of the 10 year repayment included in what you originally signed up to?

I'm afraid what you have described so far does not sound shady.

GoodbyeToAllOfThat · 25/04/2015 09:30

Now where this gets dodgy is barret homes legal stuff say we either have to pay back the original sum borrowed or 25% of the current value, whatever is higher! So they win either way if it goes up or down.

This is in your loan agreement, which presumably you signed? Or not?

CallMeNancy · 25/04/2015 09:31

This reply has been deleted

Message withdrawn at poster's request.

letscookbreakfast · 25/04/2015 09:31

There's nothing dodgy about that.

BikeRunSki · 25/04/2015 09:32

But you knew the deal when you signed up? Did you have a solicitor when you bought the house?

DownWithThisTypeOfThing · 25/04/2015 09:32

That sounds awful.

But I imagine the t&cs will have been water tight and it'll have said somewhere in the microscopic print that house prices could also go down.

Are there other people on the same estate in the same situation? It might be worth seeing if there's anything on consumer websites such as MSE.

What a bloody awful situation to be in OP Sad

TheRealAmandaClarke · 25/04/2015 09:33

Do u have to sell now?

PtolemysNeedle · 25/04/2015 09:33

I'd have thought that a company as big as barrat would have covered themselves against any future legal action, and while it hasn't turned out to be a good deal for you, that's because of the way the housing market not because of shady practice.

SophyStantonLacy · 25/04/2015 09:33

Who advised you not to save the repayment?

Summerbreezer · 25/04/2015 09:33

I find it reasonably unlikely that Barrett would not have this in their T&Cs, so from a legal point of view I think you are onto a lost cause.

Have you saved anything for the repayment? I would start investigating what can be done to salvage the situation.

MangoJuggler · 25/04/2015 09:34

Certainly run your contract past a solicitor for confirmation that the contract you signed is okay. It sounds okay but of course I am no legal eagle.

drbonnieblossman · 25/04/2015 09:35

It's not shady - you would have made a decision based on the terms and conditions, to purchase. Your issue is that you've listened to fortune tellers who've told you it'd be fine and the house would increase in value. Which its its to say when it's not your risk. They're acting no differently to a bank, just with shorter terms.

ClashCityRocker · 25/04/2015 09:36

Is it similar to shared ownership then? As in, barrets part own the house to the extent of 25 percent or the amount originally lent?

LIZS · 25/04/2015 09:36

Surely all secured loans have a similar caveat that property value may decrease as well as rise. Unless you can prove misselling of the 25% product I don't think you'll have a case. Seems like the terms you agreed were made clear , sorry.

finnbarrcar · 25/04/2015 09:37

It's not dodgy af all. You were banking on the value of your house to go up but it went down....same as lots of other folks in your predicament. It's crap but they did nothing illegal and you signed up for it with full knowledge of the terms and conditions.

twojobsjane · 25/04/2015 09:37

Yes I did sign it, but tbh I had no idea it was scewed so much in their favour. Just seems very unfair that if it rises they win and if it falls they have no losses.

They maybe a big company, but as PPI has shown big companies get fined all the time for dodgy stuff.

Don't need to sell, but need to pay the 25% back in 18ish months and I have no equity in the house and no savings in the bank.

Thanks I'll try mse, great idea!

OP posts:
LuluJakey1 · 25/04/2015 09:37

If you haven't planned ahead to pay it back, that is your fault. I do think it's a deal that is obviously to Barratt's advantage but you signed up to it and presumably it is in the loan agreement? If not you might have some recourse.

Barratt's are a big business and would not put themselves in a position where they took the risk on behalf of the homeowner.

Is it a huge amount? Could you get a bank loan?

avocadotoast · 25/04/2015 09:38

To be honest, it sounds completely normal I'm afraid. Barratt aren't going to set up a scheme that could possibly put them at a loss. Every scheme like this I've heard of is like this.

What's the agreement for paying back the loan? Do you have to start making monthly payments?

FirstWeTakeManhattan · 25/04/2015 09:38

were assured by several people that it would increase in value

Were they psychic?

Sorry, OP, but you must have known that no-one would know this. Hopefully you've been saving over the last 8 years, and tracking the value of your home, to avoid a potential problem, knowing you had to repay.

It doesn't sound immediately dodgy or shady though, unless anything was concealed or missold to you.

letscookbreakfast · 25/04/2015 09:38

You have nobody to blame but yourself OP.

Cabrinha · 25/04/2015 09:39

It's only dodgy if it's not in the t&c that you signed, in which case, they can fuck off.
It sounds like an awful situation to be in, and I feel sorry for you in that.
But... It's not like your house price dropped £80K last night.
Sounds like you've had your head in the sand about the loan terms and the implication of the market trend.

Have you spoken to Barrett? There are going to be a lot of people in this position. You have 2 years - you need to get your head out the sand, quit complaining on MN and get some practical options together.

You can earn money from a lodger tax free to a certain limit (a bit over £4000 I think). Have you got a room worth £300 a month? That could be £7200 towards the deposit you need to pay off.

I don't even think it's dodgy anyway. You have to pay back the minimum of what you borrowed - that's fair. And sounds like interest free?! Fucking good deal. If the house had appreciated in value, they paid for 25% of it - why shouldn't they get a cut? You'd have been getting a cut too.

If they said "oh if they price does down, we'll take less" they'd be out of business. Remember this isn't theory - they gave you real cash that they need back.

Don't get tied up in knots about this, concentrate on your financial plan.

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OddBoots · 25/04/2015 09:39

There is no harm (other than cost) in getting legal advice, but unless the 'several people' who assured you you it would increase and you could extend the mortgage were Barratt people and you have some kind of proof of that I think you would struggle to get get anywhere.

Your best bet is to try to find other people in the same position and get the legalities checked together and share evidence if you have it.

HeyDuggee · 25/04/2015 09:39

Shouldn't that say fast forward to 2008 and house prices around us plummet, and we realise we can't count on the house increasing more than 25% in value in next 10 years and we can't count on a remortgage, so we save like mad?

I'm afraid no solicitor will represent you as you have no case.

ShanghaiDiva · 25/04/2015 09:40

Not sure what's dodgy about it. They leant you 25% and received nothing for 10 years - they then went the loan repaid in full. You assumed the price would go up, but did not consider how you would repay the amount. I don't think the issue is with Barrett homes, who understandably want their money, but with the financial advisor who did not tell you to consider an alternative repayment plan.
You must have known for some time that the value you had no equity, so why didn't you take action earlier?

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