Discounted Open Market Value

[MatsyLR]

I've had an offer accepted for a new build that is under the DOMV scheme (25% I believe) for an area and property that I like. I meet all the criteria etc

Reading around it seems it just means when it comes to sell (I doubt I would be selling) you have to pass the saving into the next person, you still own the property 100% not like an equity loan and there's no hidden costs?

Can anyone clarify if its OK buying these types of builds?

 

[gailjon]

Sorry, can't help you about the scheme, but is it really necessary for you?

Our housing market is really, really ****** up. I can't even begin to think how we could get into a situation that means people can 'buy' a house but not actually own it and its potential value.

 

[GinG]

Sorry, can't help you about the scheme, but is it really necessary for you?

Our housing market is really, really ****** up. I can't even begin to think how we could get into a situation that means people can 'buy' a house but not actually own it and its potential value.

There is always schemes around to help you get on the market.

We used the help to buy which was the one where you own 100% of the property but then just get a 20% loan from the government.

Whilst we had to pay the interest on the load for a few years, equity soon builds up and you pay it back.

5% deposit is surely doable? It just means you need to put your life on hold for a year but I guess it depends on people's life priorities...

 

[gort]

A relative has just signed up to a scheme where you have a heavily discounted rent for 3 years but during this period you have to save a minimum of £500pm then after 3 years have first option of buying the property.
Given the value of the property now I don't expect it will be within reach to purchase in 3 years time.

 

[MatsyLR]

Sorry, can't help you about the scheme, but is it really necessary for you?

Our housing market is really, really ****** up. I can't even begin to think how we could get into a situation that means people can 'buy' a house but not actually own it and its potential value.

Well I've been to the developer and a house that is almost complete in a different area (same house design in a different development). The house itself is seems nice with and is a big improvement compared to what I'm used to living like, its also surrounded by a nice area and very easy access onto the dual carriage way which I can drive all the way up to work on (about 25min). The downside to the property is that as with most developers what you are buying is a shell, the only thing included is the electric oven, gas hob and extractor fan everything else is optional extras you have to pay for and upgrade.

From what she explained they are taking 25% from the price, I still own 100% of the property no hidden fees. The only thing is that when/if it comes time to sell I have to sell the house for 75% of market value and pass the initial savings onto the next person (get house valued at 100k have to sell it for maximum 75K) https://mortgageadvisorynetwork.co.uk/open-market-discount-scheme/. You have to meet affordability criteria showing you cant afford the house at the normal price (which I can't) along with location criteria etc. From what I can tell and the broker I had a chat with yesterday I meet all the criteria needed however its down the city council in the end on how they do their own affordability checks.

The house in question is a house that costs £165k normally, selling it at £132k under the scheme. 3 bedroom with on suite and driveway roughly 7meters length by 4.7meters width the same size back garden along with a small front garden. Only I would be living there. There's no downsides apart from selling at a later date from what I can tell. The properties I've been looking at are around the £100-130k mark so its on the higher end of my budget but it would be "done" if you know what I mean, no more fighting and bidding wars.

I'm 1st in a line of about 120 people as I got in touch with them within about 30 seconds of it appearing on the market, the house is reserved to me pending council checks for affordability. Assuming they all works out its mine if I want it, no fighting with other people as I've been doing for a long time trying to find somewhere. When I went today there was actually 2 couples who where asking about the houses (only 2 available on the development) and they got turned away saying they are taken already, I felt so bad!

 

[BUDFORCE]

@MatsyLR

Just one thing to consider, when you come to sell that house, I'm guessing, but the person buying it would also have to fit that criteria to be eligible to get the same scheme.

In which case you are quite significantly reducing the saleability of the property.

I guess if you are thinking of long term (and long enough the scheme would probably get abolished anyway so winner winner) it doesn't matter, but if you move in, find it's not right, nightmare neighbors or you need to move for whatever reason, might be harder to sell it, might affect the value also.

I'm not saying what you are doing is a bad idea, but just to consider, not like you buy a house every day right?

 

[MatsyLR]

@MatsyLR

Just one thing to consider, when you come to sell that house, I'm guessing, but the person buying it would also have to fit that criteria to be eligible to get the same scheme.

In which case you are quite significantly reducing the saleability of the property.

I guess if you are thinking of long term (and long enough the scheme would probably get abolished anyway so winner winner) it doesn't matter, but if you move in, find it's not right, nightmare neighbors or you need to move for whatever reason, might be harder to sell it, might affect the value also.

I'm not saying what you are doing is a bad idea, but just to consider, not like you buy a house every day right?

Yes of course its a downside whichever way you look at it, as yes the person who would be purchasing the property also has to meet the criteria. However to be fair, I very much doubt I would be selling any time soon if at all. I have no intentions on leaving the area all my family are close by and work is close. Its a semi detached so both the reduced prices houses are together surrounded by the next house up in the development (£220k in value) there's only 6 houses on that piece of land right in the centre of the development (its quite a large one), I actually saw one of the neighbours when I went to the development and they said hello and asked if I was purchasing next to them, seemed like a nice couple.

Also yes you need to also factor in the scheme itself is highly likely to be scrapped all together at some point.

I have time to contemplate as I have to wait for the council but just thinking things over. I might even get declined by the council who knows.....

Also went to see a different development a 2 bedroom semi for £120k (not discounted) seemed much smaller and the driveway was the back of the garden, wouldn't even be able to see my car as the fence is in the way which as massive put off. Not surrounded by a nice area either, lots of old council houses.

 

[BUDFORCE]

Also yes you need to also factor in the scheme itself is highly likely to be scrapped all together at some point.

I wonder if there is a clause in there if you own it for so many years you need to buy back the 25%, maybe after 25 years or whatever.

If not, I wouldn't be surprised given enough time the scheme gets scrapped and you are free to sell at full market value in which case you really are onto a winner there.

I mean look at what they did with council houses and some right to buy schemes, it's happened before.

 

[MatsyLR]

I wonder if there is a clause in there if you own it for so many years you need to buy back the 25%, maybe after 25 years or whatever.

If not, I wouldn't be surprised given enough time the scheme gets scrapped and you are free to sell at full market value in which case you really are onto a winner there.

I mean look at what they did with council houses and some right to buy schemes, it's happened before.

I'll put it on my list of questions before reservation is done. From what she said and what I read there are no gotchas but I'll ask. Thanks

 

[roadie]

My girlfriend completed the sale of her house at the end of the last week, which was purchased and sold on a discounted market scheme on a development in Test Valley, Hampshire. This affordable scheme was secured through a legal obligation of the original planning application, applies to each owner and is monitored by the council.

The sale was through an agent familiar with the scheme who suggested a sale price. Offers went well over this and upon acceptance of the offer the council were informed of the price. At this stage I believe they had the ability to object.

 

[MatsyLR]

My girlfriend completed the sale of her house at the end of the last week, which was purchased and sold on a discounted market scheme on a development in Test Valley, Hampshire. This affordable scheme was secured through a legal obligation of the original planning application, applies to each owner and is monitored by the council.

The sale was through an agent familiar with the scheme who suggested a sale price. Offers went well over this and upon acceptance of the offer the council were informed of the price. At this stage I believe they had the ability to object.

Does your GF regret the decision of going through the DOMV scheme?
In regards to the price, there's no offers I'm first in line and its mine for £132k assuming I'm approved by the council for the scheme although I don't think the house is worth £165k in the first place.

I've got plenty time to think about it but having second thoughts (the developer has a bad reputation along with many of the big/budget ones, along with estate management fees, broadband issue and the ideas of having to spend thousands extra on carpets/getting the lawn turfed etc (would get outside companies doing it). There is a very similar property on the used market built in 2016 for the same price, going to see it tonight but expect to be a in bidding war.

 

[BUDFORCE]

Does your GF regret the decision of going through the DOMV scheme?
In regards to the price, there's no offers I'm first in line and its mine for £132k assuming I'm approved by the council for the scheme although I don't think the house is worth £165k in the first place.

I've got plenty time to think about it but having second thoughts (the developer has a bad reputation along with many of the big/budget ones, along with estate management fees, broadband issue and the ideas of having to spend thousands extra on carpets/getting the lawn turfed etc (would get outside companies doing it). There is a very similar property on the used market built in 2016 for the same price, going to see it tonight but expect to be a in bidding war.

Yes a lot of new builds are really terrible, it is a detached or semi/terrace? The sound inslation can be awful, the lawn/turf, is normally in a very tiny about of topsoil so needs completely digging out and doing, the new build warranties they provide are a farce becuase you literally have to be just short of legal action before they'll do anything. They are often overvalued also, unfortunately like a new car, people are happy to pay a premium for a new build, which might not hold up in the short term, I see valuers put this comment or similar on literally every valuation I see on a new build. They can also be built in arears likely to flood, or in some larger developments more likely just by the nature of having so many houses build.

You need to be careful of estate managegment fees also, because there can be clauses in those so they will increase, sometimes by a lot.

The larger developers are the worst also, they get away with murder but the goverment wont dare do anything about it because it feeds their capitalism.

Not ALL new builds are bad, but many are.

 

[MatsyLR]

Yes a lot of new builds are really terrible, it is a detached or semi/terrace? The sound inslation can be awful, the lawn/turf, is normally in a very tiny about of topsoil so needs completely digging out and doing, the new build warranties they provide are a farce becuase you literally have to be just short of legal action before they'll do anything. They are often overvalued also, unfortunately like a new car, people are happy to pay a premium for a new build, which might not hold up in the short term, I see valuers put this comment or similar on literally every valuation I see on a new build. They can also be built in arears likely to flood, or in some larger developments more likely just by the nature of having so many houses build.

You need to be careful of estate managegment fees also, because there can be clauses in those so they will increase, sometimes by a lot.

The larger developers are the worst also, they get away with murder but the goverment wont dare do anything about it because it feeds their capitalism.

Not ALL new builds are bad, but many are.

Its a semi-detached.
I have a big list of questions I need to ask in my "meeting" and walking away if I'm not happy with what they say. Its just so depressing trying to buy used seeing the amount of money other people are willing to throw into an average 2/3 bed house. I've been to see 15 houses since the start of December and I was outbid on each one I put an offer on with the houses going for way more than I personally think they are worth. One of them looked nice on the outside with a attached garage and conservatory but all the carpets where soiled so the entire floor would need replaced and the kitchen units were damaged to a point were you would have to re-do the kitchen. Went for £130k, it was only a 2 bed box house about 3.6m wide. Its madness.

I'm in the North East for reference buying within 10 miles of Gateshead.

The one I'm going to tonight is very similar, I'm not sure which developer built it but its not as large as the one I'm on reserve far. The floor plan looks very similar apart from no en-suite and 1 meter longer so its slightly bigger house built in 2016. I'm 100% sure it will go for well more than £132K that the guy has it up for.

 

[roadie]

Does your GF regret the decision of going through the DOMV scheme?

None. She was able to buy her first house for less money than on the open market.

If you are eligible and its a house you want it sounds like a good scheme.

 

[Semple]

A relative has just signed up to a scheme where you have a heavily discounted rent for 3 years but during this period you have to save a minimum of £500pm then after 3 years have first option of buying the property.
Given the value of the property now I don't expect it will be within reach to purchase in 3 years time.

Yeah that sounds like a terrible scheme. Unless the market price is locked in.