And I won’t invest in plc house builders on moral grounds, says columnist
The Daily Mail is not happy either …
A devastating attack today by Merryn Somerset Webb in the Financial Times on the toxic legacy of Help To Buy which accounted for 18% of leasehold house sales in 2017.
She concludes of our out-of-control plc housebuilders:
“They exploit the taxpayer. They exploit the incompetence of government. They exploit the young. And they have played a huge part in the destruction of the UK’s visual environment.”
Persimmon to name new boss as shares sink
Shares in Persimmon tumbled yesterday as the embattled company prepared to install a new chief executive following a damaging row over fat-cat pay. The stock was down 4.7 per cent, or 116p, to 2352p on suggestions the builder could be stripped of its right to participate in the Government’s Help to Buy mortgage scheme.
Ms Somerset Webb describes herself as “a red in tooth and claw” but she would not invest in these house builders on moral grounds.
“Look to Persimmon, developer of some of the meanest looking houses in Britain (don’t take my word for it, go and look on their website). Half of its sales are Help to Buy. Pre-tax profits have just passed £1bn. Operating margins have just hit a record 30.8 per cent. Think about that: this isn’t a company, it’s a state-sponsored taxpayer exploitation machine.
“Still, at least we aren’t alone in being exploited by the sector. The first-time buyers are our fellow patsies. The very existence of Help to Buy forces up house prices in general by creating new demand. But first-time buyers also have to buy new build to get Help to Buy cash. That means that on top of the general price rise, they have to pay the average 16 per cent new-build premium as well as the “just because we can” premium that comes with buying a Help to Buy classified home.
“Then, after five fee-free years, they have to start paying interest on our loans to them — 1.75 per cent for the first year, rising at RPI rather than the lower and supposedly government-preferred inflation measure CPI, plus 1 per cent a year until the loan is paid off. The average APR assumed by the scheme is 5.2 per cent. For context, note that Virgin has a 10-year fixed-rate mortgage on offer at 2.7 per cent.
“There’s more. The taxpayer loan to the buyer really is an equity loan, so what must be paid back is a percentage of the value of the house at the point of sale. If you borrowed £40,000 to buy a house for £200,000 (20 per cent) and the value rises to £400,000, you have to pay back £80,000 (on top of the interest, of course).
“The point is that two nasty risks come with the complications of your deal. First, that your initial overpayment leaves you in negative equity on the traditional part of your mortgage (and the taxpayer potentially on the hook for some of the losses by the way). Second, that the value of your house goes up and, just as with the old shared appreciation mortgages of the 1990s, you pay back the loan and then don’t have enough equity to buy again. Miserable.”
The full article can be read here: https://www.ft.com/content/b0863064-3b72-11e9-b72b-2c7f526ca5d0
Related posts:
Surge in new-build leasehold houses with £1.9 billion sold last year
Persimmon sold leasehold houses for £50,000 more than same-size freehold houses at Harrow View West
Help To Buy cheat Persimmon racks up £1bn profits – and spread the plague of leasehold houses around the country
Leasehold is a feudal, wasting asset with opportunities for exploitation, says the Financial Times in a devastating article
Disgraceful leasehold houses reported in Guardian today
Housebuilders WILL benefit from commonhold, Hopton Build developer tells Law Commission
Sebastian can you confirm that this posting is correct.
Tower Block Cladding
01/03/2019
Manchester tower blocks.
Fire risk external cladding.
Today a judicial review ruling overturns the FTT and makes the landlord responsible to pay in full for removal and replacement.
This could ruin the weekend for Mr. Tchenguiz.
Posted by John Shepherd on 01 March 2019
Chas,
I know your question is of importance but why post it in a thread that is all about HTB and nothing to do with your question
Trevor its called choice?
Ok, as it’s not your first post by any means that’s “off the topic”, hence posted in the wrong place, just carry on and keep confusing everybody.
There is a process detailed on the Home page on how to contact editors if you have a question.
When you say “choice”, it’s not yours, or mine. The Editors chooses whether posts remain or not.
You have complained in the past suggesting you thought you were banned from the site – I wonder why
I am unaware that there is a way we can start a new subject, unlike on the About FirstPort site. Can Sebastian inform us if this is the case.
So this means if anyone has some important news (as did Chas), then one has to put it as a comment on the latest subject if it us to be read by others.
Thank you Michael, I have asked Sebastian to allow us to have a platform that we can post on as was when CARLex began.
We have followed subjects but we had to break in as the post was of such great news. It seems this was deemed worthy news.
Sorry if it got up a posters nose, I will try to be good lad in future
Whilst it is true that leaseholders in Manchester will have heir cladding costs paid . It is not it appears from the article the result of a judicial review
https://www.theguardian.com/uk-news/2019/mar/01/flat-owners-win-battle-combustible-cladding-manchester
Yes Stephen, you are correct.
The first post in this thread was copied over from the AboutFirstport site, but the post printed in the AboutFirstport site was giving the wrong info.
I did advise poster on AF site that it was not a judicial review
I don’t think it would be a good idea or in this sites interests to allow posters to have a platform to start their own new thread without any prior authority.
This is a quality site that brings important issues, correctly formatted, legal and authorised by fully qualified administrators to the forefront.
It would be very negative to allow any individual to just post up without any prior authorisation.
Examples on other Forums show how much unnecessary information is posted up, some of it in essay form, as long as your arm, and some of it totally wrong, as in the reference to a judicial review above.
As said earlier, on the home page people have access to a “Help Form” where you can ask a question or request admin to consider a matter. There are also two e mail addresses for anything of urgency
Thank you, Trevor, for kind words about the site.
In fact, we are late reporting the cladding issue in Manchester: the reason being is a tiresome cold has hit the LKP staff.
We have tried to get a forum going on this site, and http://www.BetterRetirementHousing.com, but they have never taken off.
Facebook is not an organisation we have much enthusiasm for, but it does forums very efficiently and people can, and do, introduce subjects on the LKP Facebook page. The National Leasehold Campaign closed Facebook group is also excellent.
Chas is right to highlight an important development in the Grenfell cladding saga, which is causing so much anxiety: it highlights the absurdity of leasehold and the nonsense of freehold speculators in a building’s income streams being the “long-term custodians”.
My guess is that the Aussie developer Lend-lease has subsidised the freeholder Pemberstone to take the heat out of this issue, and I will get on with this once my head clears. Sebastian
Having a cold is not a “T”issue to be sneezed at.!
Michael,
Levity is not allowed on this site, leasehold is a deadly serious issue – go to the naughty corner.