NEW three-bedroom homes will soon be available to first-time buyers for an estimated £260,000 – more than £140,000 below the real market price.
The discounted housing will be available to qualifying families under the terms of a shared-equity scheme, approved in principle by the States yesterday by 38 votes to five.
At the current interest rates, that would mean monthly mortgage repayments of around £1,675 for 25 years.
Members overwhelming backed the Jersey Homebuy initiative, which was proposed by Planning Minister Freddie Cohen, to give lower- and middle-income earners a leg up onto the housing ladder. Senator Cohen said that action was needed to help families who had seen house prices soar well beyond their grasp realise their dream of home ownership.
Article posted on 11th July, 2008 - 3.00pm
9 Article Comments
Ahhh….if only it were that simple! The reality is that this will bring more potential purchasers, cap in hand, to the door of the developer who, in all fairness, will adjust his prices upwards due to the increased demand created by the newly subsidised masses. So, the £400k first-time buyer house becomes a £450k house, before normal house price inflation is even taken into account. This in turn inflates the normal housing stock cost and nothing is done to combat soaring prices.
Lastly, the first-time buyer that now has 100% ownership, but only 65% equity, can never actually afford to move up the ladder because the shared equity scheme means they won’t realise the same capital gain upon sale as others and therefor are always a third in value behind a rising housing market. They’ve finally let in you in, but then you’re locked in and you can never afford to get out.
It seems a well-intentioned scheme, but the repercussions have not been thought through…ring any bells?
’shared equity’ is the key phrase. surprising there’s no mention of a need to repay the remaining portion not put up by the buyer when the house is sold. is there interest charged on the unfunded amount? who gets the profit from the unfunded amount? who suffers any loss should the property be sold below the purhcase price?
the article makes it sound like there’s a £140k free gift here!
a buyer is still risking £260k and potentially more if the other £140k is a reversionary liability.
Wake up and smell the coffee Freddie!!! this proposal will make very little difference to the average couple who simply do not have the ability to pay circa £21k per annum for 25 years and be locked into lifetime ownership of one property.
Address the real problem which is hugely inflated property pricing.
ive got a good idea….
the States should issue debt to jersey banks for the amount they lend to first time buyers. interest costs should be low as the debt will be backed by a wide and varied range of borrowers and collateral. they could even set up a trust for this charitable scheme so they and the taxpayer will never be liable for any losses. if the States do this they wont need to raise the finance for their equity share from taxes (as they will have to do under the intended scheme).
never mind just first time buyers - the States could even expand this scheme offering it to the jobless and those without any income. you know, the sort of people who would never be able to buy.
i wonder why this hasnt been done before? after all what could go wrong!
governments should not interfere with private markets unless they intend to nationalise the whole market. otherwise the only effect they have is to influence price - in this case, upwards!
Be honest homes for ‘j’ cats working in the finance industry,yet again another scam to be foisted on the gullible.
I cannot believe that over £1400 per month repayment on a loan seems a good deal to all those States members, where on earth do they think that money will come from? I mean over £21,000 per annum. How could a young couple wanting to start a family possibly find this money out of one wage? At times like this I am ashamed to say I am a Jersey born person and as for our children, where will they live? Not surprisingly they are all moving to the uk. This is just breaking up local families like ours.
What everyone is concentrating on is value and increased future value. What you all seem to forget is that some of us just want our children to have a bedroom of their own and dare I say it a Garden in which to play. It is not all about the profit. It’s about living day to day and enjoying that.
I agree with ‘Ryan’. i have 2 boys with 8 years between them. This scheme may give us a chance to actually have some space and let them grow up in a nice house that would be lived in for many years to come, with separate bedrooms - something that we can not achieve on the open market as the prices are rising a lot faster that our earnings.
To be fair to Freddie, in his election campaign he did say that he would promote a shared equity arrangement for people struggling to buy homes. Now he has acheived this goal, however I wondered which of the island population he was considering at the time he made his proposal?
Now that house prices are 60% higher than they were at the time Freddie was elected and incomes have not gone up at the same rate relatively, it is the people working in finance who can’t afford to buy a house nowadays and I would suggest it would be these people that will benefit the most from shaed equity.