What a lousy time to be a first time buyer

[yulesy]

Limited/very little equity, very few starter properties available. Mortgage rates rising every day and house prices still staggeringly high in many areas. I understand rates have been 15% in the past but the crucial difference is that house prices were affordable relative to incomes. How are first time buyers without significant family help going to manage to buy in this period? Or will they just… not? Shared ownership doesn’t bring costs down, just means you need less of a deposit. But what if it’s not the deposit that is the issue, but in fact the eye watering repayments?

I’m looking to upsize, so nobody will be happier than me. But I can’t see it. You need forced sales and there won’t be any. The government is already setting its stall out to the banks. You have to be incredibly head in the sand denial to get repossessed before all this kicked off, it’ll be harder now with the government putting pressure on the banks.

You need forced sales and there won’t be any.

Of course there will. The measures the governments is suggesting are just kicking the can down the road for people who just can’t pay their mortgage. Interest only for six months, then what? Longer fixed term - they don’t meet affordability criteria for a remortgage. Forced sales won’t happen immediately or very soon but watch them start kicking in a year or so down the road - hopefully before not after a GE.

I do wonder how much of the new buildings are just dodgy tax schemes. A pile of high rise shoebox flats have sprung up in my area for 500K when you can still buy a three bed house for less. Who on earth is buying them?

This is what worries me. Obviously forced sales are an absolute disaster for those affected, but for the bigger picture, the market needs to be allowed to fail and I'm not sure it will be.

I absolutely guarantee theyre will not be forced sales for anybody who cooperates with the bank.

I have personal experience over a 10 year period of the bank not repossessing. Despite not being able to afford the mortgage.

I will be on every single thread advising people how to avoid it.

Good for you. You can guarantee nothing of the sort. Banks are businesses not charities.

What you also have to factor in which many people aren’t aware of is the ground rent issue with flats

many people who bought a flat prior to June last year will not be able to sell because a large percentage of mortgage lenders won’t lend to flats who ground rent
are more than 250 a year outside of London and 1000 in London or if they have doubling ground rent

that’s why all new builds built from June /July last year have a peppercorn ground rent

a flat that my son was buying not a single one of the 400 plus flats can be sold because of this
the freeholder has to do - I think a deed of varation in order for a flat to sell and this freeholder won’t

this is happening up and down the country
at the moment
you will see flats SSTC but they don’t sell
if you need a deed of variation it’s can cost thousands of pounds as you pay both yours and the freeholders cost

My son is buying atm
but he’s been massively lucky that he got his deposit via an inheritance-from my parents direct so maybe not lucky as someone had to die 😂
But he’s basically been able to jump to a 3 bed 2 bath house buying with his partner
he is protecting his deposit and the house is on top spec and they can basically move in and they have no plans to move it’s sort of a forever home if they stay in the same city

He still got I think 15 k off the asking price and the sellers accepted his offer straight away

I’ve been watching rightmove and most are reducing in the 325 - 350 bracket

some are stubbornly staying at the same price and not selling

It's notnjust people who can't pay the mortgage though, it's people who need to move but can't raise enough to clear the mortgage.

I do suspect the banks will be under pressure not to repossess, which will mean the economic crisis, with high inflation goes on much longer than it should.

Also, banks supporting a handful of people struggling with mortgages where the value of the property still covers the debt is entirely different to large numbers not being able to pay in a market where an eventual forced sale might not repay the debt.

We'll end up with another sub prime crisis and government can't allow that.

The banks want their money back and the best way to ensure that is tokeep the mortgagee in situ paying something.
If the property is repossessed the banks receive nothing for up to 2 years until its sold and potentially 12 years ehilst the deficit is recovered abd in the meantime thats one less person any bank can lend to. If that person is 30-35 having them out of the game for 12 years on mass isnt a good business plan.

Reduces their customer base and costs them money, theyll be keen to avoid.

Umm, this is quite frightening. Who are these corporations, @3BSHKATS ? Which area of the country are you in? Why do you think they are buying them up, is there any indication?

That really isn’t true. Last time repossessions were sold at knock down prices. Lenders are only interested in recouping the loan value, they have zero interest in the equity. There are plenty of new FTBs and landlords to plug the gap.

It would help if landlords didn't buy cheap and affordable properties.

People buying cheap properties, upgrading them and making a profit are driving FTB out of the market.

Most people would happily buy cheaper properties to live in, upgrade and make a home. But houses being seen as investments rather than homes destroys this.

My property is in the north west, they are buying them up because they are relatively cheap and they’re renting them out disconcertingly by the room, for thousands per month.

I was in a first time buyer price range myself in a different area, but still a city centre. And when I was looking round houses, there were literally families in one room i.e. the front room. Then upstairs, there would be two or three people in a room asleep while they were conducting viewings.
I pointed out that the property was damaged in places and was told don’t worry the company that are currently renting this property out to promise vacant possession, and they also promised to fix any damage to the property. The Estate Agent was keen to understand if I was a landlord so that they could set up a similar arrangement with myself having purchased the property. He looked a bit upset when I said I wanted to live in there.
Anyway, I made a note of the name of this organisation. I’ll be honest with you just in case the kids have had enough of my house and I do want to rent it out. I did a little search online and literally they are snapping up terraces like a monopoly board.

Additionally, I have colleagues who work in care And in order to house the number of children coming into care they have been set the target of purchasing 40 properties In the West Midlands next year. These will be run as residential homes because they just aren’t the foster homes to put them into. So again, they will be purchasing three or four bedroom houses that I would imagine the lower end of the market because they won’t care about the location and they won’t care about the condition of the property.

More and more people are getting displaced the numbers on not going down and these people need housing. We’ve run out of hotels.

They have to recuperate as much of the money as they possibly can for the mortgagee. Knockdown prices won’t be permitted. The judge can order a minimum sale price when they Grant repossession. But given the people that are susceptible to repossession would’ve put down minimal deposit, it’s actually that’s not the issue. Even if the repossessions are sold, minus the equity, that’s not gonna be the kind of drop that’s going to impact the market.

I will be on every single thread advising people how to avoid it.

Good for you!

It’s companies like L&G I think. They (and their clients) need steady income so if they become landlords that’s what they get. I think the government would prefer professional landlords to BTLers.

Oh definitely

In the very early 1990’s something like 350,000 houses were repossessed. I was very young at the time in my first job and I remember a middle aged colleague being able to buy because they bought a repossession.

Prices near me are coming down, slowing, as are sales. Two houses in my road that are exactly the same are a good example. First house sold 18 months ago for 495k needed a lot of work. New kitchen, bathroom, windows and all internal decorating. The other went up 2 months ago for the same price that is immaculate show home standard, not a sniff of a buyer in three months.

Wrong. A close friend is senior in the industry and the regulatory landscape is very different to what it has been previously, making repossession much harder and more unlikely. Nobody in the industry is predicting mass repossessions. The new government charter which many major lenders have signed up to, with more anticipated to follow, is offering term extensions with no further affordability checks which will reduce payments for people.

Stop trying to stir up hysteria without knowing the facts.

345,000 repossessions over a 5 year period.
These days theyd be bought by Springboks,
we buy any house etc before it came to that

That particular poster appears to be literally wetting their pants with excitement at the prospect of families being thrown out of their homes. As you say it quite simply won’t happen.

That particular poster is doing nothing of the sort. She’s a realist and this isn’t her first rodeo. And she also refused to buy a repossession in 1991 when the market was inundated with them. Anyone who thinks it won’t happen is delusional.

Oh yes, all those delusional industry insiders 🧐

https://www.bankofengland.co.uk/bank-overground/2023/how-does-household-financial-resilience-compare-to-the-early-1990s-recession

HTH and that’s without the fact the market wasn’t regulated until the early 2000s. This is nothing like the 1990s, I think you need to educate yourself.