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AIBU?

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Original poster

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:
Marynary · 26/04/2015 11:55

You will never win if you try to take legal action as you signed a contract agreeing to the terms and conditions.

This kind of thing happened a lot in the 80s but at least then people had no reason to think that house prices could go down as they never had. You had no excuse. You should have been aware of the fact that property prices can go up or down as this had happened before.

You can't claim that the house was "over valued" as houses are worth what people will pay for them. If the house cost more than similar houses then more fool you for paying it.

Feckeggblue · 26/04/2015 11:57

I completely agree she can't follow through on the repayment as specified but I'm pointing out keys not worry too much about barratt either. It wasn't a loan; they're not doing her a favour by not charging interest; they did something they had to to shift the house.
I disagree she's in danger of losing her home tbh, as been pointed out previously on the information here there would be no point in barratt going down that route

Fairenuff · 26/04/2015 12:00

more houses need to be built to meet demand and bring down prices

The trouble with that is that land prices with planning permission are still sky high. Developers won't build houses if they can't make a profit on them.

They already have to build a certain percentage of social housing with every development and often pay for extra infrastructure. House prices need to reflect build costs. This is why no-one is building much at the moment.

Floggingmolly · 26/04/2015 12:07

Barrett won't suspend payment indefinitely. Why should they? Op is currently living in a house that they still own 25% of; they will insist on some kind of repayment plan being offered at the time the debt is due.
As op is currently struggling to pay the actual mortgage at the moment, that doesn't bode well.
Selling or bankruptcy may well turn out to be the only route available to her.
I don't think advice along the lines of "don't worry about Barrats" is actually at all helpful, tbh.

Feckeggblue · 26/04/2015 12:11

That's not advice to the OP, it's a general comment to some of the posters here. If you rtft you'll see I have already offered a large amount of advice.
I think it's likely they will offer a repayment plan or refer her for a loan. The OP will have to decide whether she wants to go ahead with these. She appears to have gone so presumably has all the help she needed already.

specialsubject · 26/04/2015 12:27

oops, missed OPs later post.

charging too much for something available cheaper elsewhere (if indeed that happened) is not illegal. That's life.

Sallyingforth · 26/04/2015 12:36

Op is currently living in a house that they still own 25% of

Is that actually true?

Original poster
twojobsjane · 26/04/2015 13:14

Wow thanks everyone, even the people slamming me. I'll admit again o was niave, I used all the people to complete the sale that barrat recommended.

I do now think it was over priced and the bank went ahead with it as they effectively saw it as a 100% mortgage. Barret didn't give me a loan, they never had this 25% they just plucked it from thin air. They were having problems shifting it so did this "dream" scheme, if they could of sold for their price without that scheme they would of done that.

It does look like I can delay the repayment for 5 years at their discretion.

Exploring lots of options with this.

Looks like we have two choices, extend the date or default on it and get made bankrupt. I want to go for the first, but not sure that will really help as haven't been able to save much over the years and can't keep working as much as I have been for 5 more years.

OP posts:
Icimoi · 26/04/2015 13:20

I'm sure Barretts could have sold without that scheme, it was simply one of a number of incentives that enabled them to shift houses more quickly. After all, you bought the house at that price: did you see any houses you wanted that cost 25% less and didn't require a deposit? How about your neighbours?

As has been pointed out, OP, houses are worth what people will pay for them, no more, no less.

Fairenuff · 26/04/2015 13:25

Why can't you keep working as you have been for 5 more years OP?

VacantExpression · 26/04/2015 13:29

The property would have been valued by an independent valuer instructed by the bank as part of them processing your mortgage application. Any queries regarding the value of the property should be discussed with them in the first instance id have thought.

Cabrinha · 26/04/2015 13:36

What about a lodger?

Floggingmolly · 26/04/2015 13:40

Op knowingly bought 75% of the property via a mortgage from Halifax, the other 25% remained the property of Barretts until such time as the agreed amount was paid off. She has apparently spent the last 8 years repaying the mortgage only.
Why wouldn't it be true?

Feckeggblue · 26/04/2015 14:17

We don't know barratt own 25% of the property. This isn't a shared ownership scheme, it was an incentive to buy. It's not impossible they set it up so that they own the remaining share but it's highly unlikely.
More likely, as mentioned earlier in the thread, they discounted by 25% in lieu of deposit so the OP could buy and deferred the repayment for 10 Years, with the 25% secured against the house as a second charge after Halifax.

Floggingmolly · 26/04/2015 14:49

Oh, ok.

keepitsimple0 · 26/04/2015 14:53

out of curiosity, how does this work? If you default on the mortgage or the 25% thing, who owns the home?

DisappointedOne · 26/04/2015 15:03

Barents will have a second charge. Mortgage co have first. Until both are paid they own the house.

Feckeggblue · 26/04/2015 15:35

Well legally OP owns the home. But she has agreed to charges against it to Halifax and barratt which state they can force a sale to recover their money if the OP stops paying them. Realistically when the property is in NE neither will get their money in the short term but that's a risk they've taken and they would usually be accepting of a longer term plan to recover their money in goose circumstances.

Feckeggblue · 26/04/2015 15:35

Those, not goose. Lol

strawberrypenguin · 26/04/2015 16:12

You need to ask Barrett for the 5 year extension - do that now.
When you do that find out if you owe them the original 25% or 25% of the value at the time you make the payment.
Open an ISA and put all your second job payments in there.
How much do you need to save? Will your bank let you take a mortgage holiday so you can put payments that would be going to the bank into your 25% savings? But make sure you understand the impact of this on your mortgage payments!

namechange0dq8 · 26/04/2015 16:23

The property would have been valued by an independent valuer instructed by the bank as part of them processing your mortgage application.

Valuations of new houses are notoriously difficult. No valuation made in 2007 took account of the risk of the market collapsing, and (assuming we're not talking central London) a new house on a new estate will have dropped value because of the state of the market and dropped value because of the inevitable loss on new houses. Valuations can only judge what a house is worth that day (or, more plausibly, what similar houses were worth last week). A valuation on a new house done in 2007 was about what that house could have sold for in 2007, not what it might hypothetically be worth ten years later. If valuers could call the market that far into the future at anything better than chance they wouldn't be working for estate agents, they've be being paid zillions on a dealing floor.

I've not bought a house since the last century, but I was always alarmed at the way in which people could get 95% or 100% mortgages on new houses. It's hardly a secret that new houses drop value relative to the market, even if not in absolute terms, in their early years. And more so if the developer still has properties to shift (why would you buy a second-hand house on the open market when you can buy it new with developer's inducements?) So if you buy a house from the developer on a high LTV, and then fall into difficulties a couple of years later, it could very well end badly. Especially given the front-loading of repayment mortgages mean you probably owe more than the original advance anyway.

dontbelievesheeple · 26/04/2015 18:22

i would be focussing on what power you have in order to solve this problem.

a bit like a game of poker.

withdraw every penny out of bank accounts.
contact barratt and say you are handing in the keys unless you can come to some agreement/loan over a long period as you simply cannot pay it back

other than that, the games up, hand in the keys, walk away and rent forever.
owning a house is overrated and soo 2003 anyway

Feckeggblue · 26/04/2015 18:29

That's crap advice

LIZS · 26/04/2015 18:30

Handing the house back will mean that op is left with outstanding debt and facing potential bankruptcy Hmm

letscookbreakfast · 26/04/2015 18:32

dontbelievesheeple That is utter shit advice.

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