Buying Houses and the Government

Government's Small, Faltering Steps

Any help for people struggling in the housing market must be welcomed. It can only be hoped that the measures announced 2nd September will be followed by others in days rather than weeks.

What is striking is the contrast between the seriousness of the economic situation, as reflected in Chancellor Darling's recent comments, and the comparatively minor measures just announced.

The other depressing factor is the continuing evidence that the government is on the side of big business, rather than ordinary citizens.

For example, it appears that the bulk (if not all) of the additional funding for Shared Equity house purchases is to be allocated for new houses property developers wish to sell.

The shortage of funding to help young people to buy (and private citizens to sell) older houses in the housing market gives the impression, again, that the emphasis is on helping developers to sell houses, rather than helping young people to buy them.

If this is not the case, why is there no more support for individual citizens who wish to sell, and buy, houses?

What follows is an account of the experiences of one young couple who attempted to buy a house using the Government Shared Equity Scheme.

The Government’s Shared Equity Scheme and First-Time Buyers

Introduction
A scheme with a government backed loan at low interest acting as a deposit (say 25%), plus a mortgage at a competitive interest rate, appears ideal for First-Time Buyers on modest incomes.

For this reason, we attempted to buy a house for approximately £110,000 – an amount which our joint incomes matched comfortably for repayments.

Unfortunately, although we responded promptly to all requests for information - and met the criteria of the Scheme, when we finally had an offer for a property accepted we were told that the money had run out.

Yet, immediately before we made the offer, we had been told that the money was available for us to go ahead. As any reasonable interpretation of this must be that the money had been allocated, an explanation of what happened to it is obviously required.

The purpose of this report is to draw attention to the difficulties, especially for young people, arising from the way in which the scheme is operating.

Apart from the facts recorded below, there have been innumerable telephone calls and Emails.

There is supporting written evidence for the factors listed below.

Operation of the Shared Equity Scheme 2008

The details which follow show how the scheme operated in our case.

(i) 4^th April MY 4 Walls assessed, and approved, our application for a loan to support (as a deposit) a Shared Equity Scheme purchase.

(ii) 18 April we received a letter from MY Choice Homebuy to confirm notification from our local Homebuy agent.

(iii) We made an application for a mortgage to the Halifax to supplement the loan.

(iv) 20 May we received confirmation from Connells that an ‘in principle’ acceptance had been received from the Halifax for up to £90,000. This was confirmed on a Priority Card.

(v) 23 May we received an Email stating the fees for buying a house for £110,000.

(vi) 10 June we received confirmation to go ahead and make an offer.

(vii) In this context, we made an offer of £90,000. This offer was not accepted.

(viii) We then made an offer of £105,000 for a house in Cromwell Street.

30 June we were informed that our minimum purchase price was £107,000.

This mystified us, as it appears totally unreasonable that there should be a minimum purchase price. In any case, why were we not told this before we made the offer?

(ix) 30 June we received a letter confirming the Scheme acceptance of our application.

(x) As our offer of £105,000 was not accepted, we increased it to £110,000.

(xi) Our offer of £110,000 for 65 Cromwell Street was accepted by the estate agents, Saxon Mee on 11 August.

(xii) 12 August the Scheme administrator was informed (by Email) that our offer had been accepted.

(xiii) 18 August we received forms to be completed from the Scheme Administrator.

(xiv) 19 August the completed forms were returned to the Scheme Administrator.

(xv) During the afternoon of 19 August, the Scheme Administrator ‘phoned and stated that the money had run out.

This was a shock and, obviously, extremely disappointing. We cannot understand how, within days, we were told that the money had been allocated, and then that it had disappeared.

Policy Alternatives: Urgent

For alternatives to the Government's current policies see Capitalism in Crisis: A Socialist Solution. This is available on ebay at cost (£4, including p&p), or from John Kyte (same cost) Flat 27, No 1 Park Hill, Moseley, Birmingham B13 8DU