AIBU to think a 2.5% deposit scheme will not help?

[Lugol]

DS told me yesterday about some mortgage scheme the Government have come up with where the deposit is 2.5%.

I'm just wondering how any young people are going to be able to take advantage when the Government have made them virtually unemployable and there are no jobs.

Surely if they want young people buying houses, or anyone buying houses for that matter, then the Government need to create an environment where people can afford to.
The CoL is off the charts and only getting worse if this 25% increase in energy costs is going ahead in January. Fuel at the highest it's been.
The housing market is totally stagnant.

They keep building whole estates of houses (not even starter houses either) and I keep wondering who the fuck is going to buy them.

Because it's not young people.

YABU - Don't be daft Lugol, All of the young people will magically find jobs and buy houses
YANBU - the country is fucked

Burnham and his colleagues know the situation is complex and can’t be resolved easily, so they’ve done the easy thing by repackaging Help to Buy, and will effectively screw over the lives of thousands of people because it is rarely a good thing to buy a property with a very low deposit, especially in this climate. Government have to be seen to be doing something about this hot topic, I guess.

Why does everyone on here assume if you're not impressed with Labour or the Tories you must be a Reform voter? 😂

I'm an immigrant myself FFS

The average property price is something like £250k, so it’s going to take ages for the average Joe to save £25k who has no help from family.

I expect this scheme will be age-restricted, so the developers and banks will suck in as many young people as possible on long repayment terms paying vast sums in interest (on two loans).

They need to build proper affordable starter homes really.

The only people it will help is the house builders. People using this scheme will be at huge risk of negative equity

I would far rather see the money be used to create more social housing

If helps my 22 year old start her own life then great! A long mortgage will still be better than renting for life.
Shes done it all the right way. Stayed home
for uni to save debt, takes a pack lunch to work, doesn’t drink or spend 100s on socialising and I’m hoping her and her boyfriend will finally be able to break free from home.

I think it’s a bit of a trap for those who go for it. I did the 10% help to buy, I had a full deposit but the salesperson said I might as well as it was interest free at the start.

What I didn’t realise (and what isn’t very clear if you don’t do your research properly) is the government effectively own a portion of your house and the percentage you pay back increases if the value of your house increases. If house prices drop you still pay the amount borrowed it doesn’t decrease. It’s win win for the government.

When I came to sell I had to pay for a valuation to meet their criteria and then when the sale dragged on I had to pay for it again. They increased the value on the second valuation which meant I paid £2000 more to help to buy.

I know. I am actually left of centre and I loathe Reform
But all the recent initiatives by Labour feel a bit patronising and like they are just "tinkering around the edges"

I want money spent on social housing not on propping up Persimmon's profits

Exactly, no lawyer I know would ever purchase using this scheme. It makes it far trickier to sell

I don’t think this is necessarily right. The last help to buy was actually hugely successful at getting people on the property ladder or upsized, it’s a bit of a myth that there was a lot to negative equity, I think there were potentially more issues in flats which did not retain their value as well, especially post covid. Help to buy was around for years used by tens of thousands of people, the negative equity myth is vastly inflated, mortgage companies would not lend if that was inevitable. Help to buy was interest free for 5 years, houses were not in negative equity at that point; many people remortgaged at that point with a ‘normal’ mortgage releasing help to buy.

The problem is it helped people who were already financially secure enough to be able to obtain a large ish mortgage, it helped the billion pound home building industry, I don’t think it actually helped many low income people onto the property ladder.

You didn’t understand that when you bought? That’s very irresponsible. We did it and worked out we actually saved money as we would have spent more on interest if that portion was mortgaged than doing HTB. It makes it sustainable for the tax payer, and you didn’t ’lose’ £2000, if you’d have bought when you could have afforded houses would have been worth more, it enabled you to lock in a house earlier, and you didn’t have to pay interest.

I think you’re thinking of shared ownership, HTB properties are not harder to sell, you just have to settle the bill with government, it’s a valuation and a form, that’s it.

It's good if you have shares in house building

One of mine bought using the last help to buy scheme, and fully read the terms so understood where the money was coming from. I mean you surely can’t have thought you were getting free money so you must have known you were getting a second loan for the rest of the deposit!
This scheme is not really any different than the 100% mortgages that used to be available from the banks historically, and if it gets young people on the housing ladder, that’s great news.

Why?

Affordable would mean 3x salary for a whole house.

The world is insane.
Look up average house prices for your area and average wage.

That was then, this is now. HTB emerged in a time of increasing property prices when interest rates were lower than what they are now, abnormally low post-Covid. Also important to note that anyone who could overpay then whilst the rates were low were sensible and did better than those who didn’t.

The landscape has changed drastically - gradually falling property prices, interest rates rising, economy not doing great.

Maybe, we did have a lot of house price stagnation 2016-2020, I think people forget that, my area was awful, new builds were the easiest things to buy. But completely agree about interest rates which just reiterates my point, this is going to help middle income people, not lower income. I’m not for it, I’m trying to challenge the narrative that it’s disastrous for people (as I generally think governments and banks these days try to avoid systemic negative equity after 2008), I don’t necessarily think the scheme in itself is bad, but I think it benefits the wrong people and thus not good public policy.

What’s the answer then? More social housing?

It will make the housing crisis worse and is primarily about Labour hitting its building targets (which is why it only applies to new builds) rather than helping FTBs.

The housing crisis is an affordability crisis- houses cost more than people can afford to pay. The market had started to correct itself- prices gradually coming down in most of the country- but the effect of this policy will be to keep prices higher artificially, perpetuating the affordability crisis.

The result for FTBs now is that they can buy, but only a crappy new build which will immediately lose value (as all new builds do) putting them into negative equity. Their purchased home will then sit outside the new scheme meaning that it's less appealing for other FTBs. Countless people lost substantial amounts under Help to Buy. The only real beneficiaries of this sort of scheme are the house builders and their shareholders.

Yes.

They'll come up with these things while skating around the elephant in the room. There's discussions on pensions, but a lot of our rising population is all within a five year window in age. What happens when they reach pension age, but haven't paid in? Where are they going to be housed? Is there a point to working a low wage job anymore?
Ask certain questions and you are far right.

’Young’ people haven’t been buying houses for decades. Most people I know bought in their 30s. I think the national average is 35. I imagine that if a ‘young’ person wants to buy then they will be looking at a studio or 1 bed flat.

It's on newbuilds only. It's clearly not for the purpose of helping the buyer that's for sure.

We have two SH properties a year come available in our area. For the kast five years they've gone to immigrant families who have come via asylum seeking, because they were temporarily housed via the asylum act and are considered vulnerable. Housing isn't going to go to the local population. Small villages don't want them, so deprived/low wage areas are flooded with them and that isn't an exaggeration. We also shouldn't be giving visas for bus drivers/hospitality workers etc.