“Berlin buys 670 flats on Karl-Marx-Allee from private owner”

THAT’S how you do it NOT “Help Developers to Make Obscene Profits” aka Help to Buy!

“The state of Berlin has bought back 670 apartments on the historic Karl-Marx-Allee from a private owner after decades of property privatisation in the German capital.

A 1950s prestige project for socialist East Germany, the grand boulevard that stretches from the city centre to Friedrichshain in the east has been the frontline of a months-long fight over gentrification and rising property prices.

The struggle erupted last November when the property management firm Predac announced its intention to offload 700 apartments on the road to Berlin’s largest property company, Deutsche Wohnen.

Fearing rent increases, tenants organised protest marches and hung banners from their apartments, eventually pushing the city senate to block the sale.

After months of legal wrangling, the senate confirmed on Monday that three blocs containing more than 670 apartments would instead be purchased by the state-owned housing provider Gewobag.

While the price of the sale was not confirmed by either side, the move to renationalise the buildings on Karl-Marx-Allee is likely to come at a steep cost, with estimates ranging between €90m-€100m (£80m-£90m).

Berlin’s mayor said the move was indicative of a wider strategy to reacquire housing stock sold to private investors in the 1990s, following rapid rises in rental costs in the city in recent years.

“Berliners should be able to continue to afford living in the city,” said Michael Müller. “That is why it was and continues to be our intention to buy up apartments wherever we can, so that Berlin can regain control of its property market.”

https://www.theguardian.com/world/2019/jul/16/berlin-buys-670-flats-on-karl-marx-allee-from-private-owner?CMP=Share_iOSApp_Other

Times: “Persimmon faults are exposed on TV”

“Pressure is about to return to Persimmon, with a television investigation set to reveal more concerns about the quality of its properties and customer service.

Britain’s New Build Scandal, to be aired tonight on Channel 4 as part of its Dispatches series, will feature an inspection of a new Persimmon home that found 295 faults, 70 per cent of which were so serious that they violated building regulations, including a fire door that did not close, leaking sinks, unsealed showers and faulty waste connections.

Britain’s most profitable housebuilder is responsible for one in seven homes sold via the government-backed Help to Buy mortgage scheme and in February became the first to report an annual profit of more than £1 billion. Based in York and a member of the FTSE 100 index of leading shares, it was embroiled in a pay scandal last year when Jeff Fairburn, 53, chief executive at that time, was awarded £81.6 million under a long-term incentive scheme put together in 2012 and linked to dividends and the share price.

Persimmon apologised to the customers featured in the programme, including two whose home was uninhabitable for three months after buying it. “We fully accept that on too many occasions in the past we have fallen short on customer care and we can and will do better,” it said.

Last month The Times revealed Persimmon had removed complaints about the standard of its homes from Facebook after taking over the administration of a group targeting customers on the social media site.”

Source: Times, pay wall

“How Help to Buy can push homeowners into accidental arrears”

“…. A report released in June by the National Audit Office revealed systems to collect the interest on Help to Buy equity loans after the initial five-year interest-free period were not put in place for all homeowners when some of the loans were originally set up.

This led to approximately 739 households falling into arrears potentially without knowing it once their interest-free period came to an end.

Now, some of those same homeowners say they are experiencing a fresh raft of problems.

A report released in June by the National Audit Office revealed systems to collect the interest on Help to Buy equity loans after the initial five-year interest-free period were not put in place for all homeowners when some of the loans were originally set up.

This led to approximately 739 households falling into arrears potentially without knowing it once their interest-free period came to an end. …

Now, some of those same homeowners say they are experiencing a fresh raft of problems.

[The] Government had appointed mortgage and loan servicing company Target to administer the Help to Buy loans.

When a borrower takes a Help to Buy equity loan, their local Help to Buy agent then passes on their details to Target to administer the loan.

… This is Money asked Homes England how long it should take for details to move over from Help to Buy agents to Target. It also asked how many homeowners are still in arrears.

Homes England declined to answer both questions. However, a source close to the organisation said the delay is linked to the time taken to document a new homeowner with the Land Registry.

This is Money then approached Target directly. The administrator was asked how many direct debits had been set up, and what the average wait time was.

Target did not respond to these questions. Instead a spokesman said: ‘We are aware that Homes England has provided a response and we would refer you to that. At this stage we don’t have anything further to add.’

… The report suggested that Target, the organisation administering the loans on behalf of Homes England, was overwhelmed by the volume of queries from homeowners once they started redeeming their loans and paying interest.

At one point, approximately 25 staff were dealing with some 20,000 customer enquiries per month, the report found.

As a result the company had to triple the number of staff dedicated to administering the scheme to keep up with demand.

The report also suggests that the group’s process for recovering outstanding debts wasn’t up to scratch. Target did not use enforcement agents or share information with credit reference agencies, the auditor found.

The group has since responded to this stating that it does use enforcement agents but was unable to in this case due to contractual and policy limitations.

On top of this, Homes England itself had raised concerns over the accuracy and completeness of data held by Target.”

https://www.thisismoney.co.uk/money/mortgageshome/article-7199989/How-Help-Buy-push-homeowners-accidental-arrears.html

“Persimmon claims ‘around half’ its first-time buyers used Help to Buy as sales slip at the house builder amid quality and service revamp”

£77,000 profit per house, adding £30,000-plus to the cost of a new home, poor quality builds, CEO laughing all the way to the bank with his multi-million bonuses – what could possibly go wrong? Answer: nothing goes wrongfor Persimmon, because this government doesn’t just turn a blind eye, it actively encourages this behaviour by putting developers in the planning driving seat (in chauffeur-driven cars)!

“Over half of properties sold by housebuilder Persimmon in the first six months of this year went to first-time buyers, the group’s trading update reveals.

The group sold 3,082 homes to first-time buyers, representing 52 per cent of all private sales for the period.

Speaking to This is Money, a spokesman for Persimmon said ‘around 50 per cent’ of these first-time buyers used Help to Buy schemes to complete their purchase.

While the proportion of purchases being made via Help to Buy adds weight to criticisms that housebuilders are being propped up by the Government schemes, they appear to have done little to help to Persimmon’s overall performance in the first half of the year….

… Persimmon scored the worst figures of all the major house builders in a recent Home Builders Federation new homes survey.

The firm launched a review of its house quality and customer care functions in April. …”

https://www.dailymail.co.uk/money/markets/article-7212547/Persimmon-claims-half-time-buyers-used-Help-Buy-snap-home.html?ito=1490

“Victory for future homeowners as developers are banned from selling new leasehold houses – but existing victims of high charges are still waiting for help”

” … he move comes in the wake of an ongoing scandal that has seen developers take advantage of leaseholds to maximise profits, leaving 100,000 families facing crippling ground rents – and a difficulty selling.

All new-build houses will be sold as freehold, although the ban is not applied retrospectively, which means only future homeowners will benefit. Flats will still be able to be sold leasehold. …”

https://www.thisismoney.co.uk/money/mortgageshome/article-7188849/Developers-banned-selling-leasehold-new-build-houses.html?

Developers holding Help to Buy purchasers to ransom

Just when you think all the juice had been extracted from buyers, another scandal pops up.

“Contracts for new-build homes and the industry-led code of practice that informs them are heavily weighted in favour of the developer. The Consumer Rights Act does not include new builds, giving buyers less protection than high-street shoppers, and each year hundreds of purchasers are left in limbo when a home is not finished in time. They can’t pull out and reclaim their deposit until building works look likely to exceed what’s known as the “long-stop” date – the final date by which a property can be finished, which is often buried in the small print.

This can be up to six months later than the legal completion date cited in the contracts, and the legal completion date is often months later than the estimates given when contracts are exchanged. Most mortgage offers are only valid for three months.

While purchasers are legally bound to the developer’s timetable for the exchange and completion of contracts and face substantial penalties if they delay, developers allow themselves generous leeway.

A completion date only becomes legally binding when the home is ready and a “completion notice” is served, after which purchasers have seven to 10 days to pay up or else face interest charges on the balance.

Nor are developers obliged to pay compensation for delays, unless the developer exceeds the “long-stop” date. Purchasers who have to proceed with the sale of their old home after exchanging contracts, or to rearrange a mortgage when their offer expires, can be left heavily out of pocket. …”

https://www.theguardian.com/money/2019/jun/23/new-build-homes-buy-delay-bill-developers?

“Help to Buy: ‘Most users did not need help report finds’ “

“Almost two-thirds of homebuyers who used the government’s Help to Buy scheme could have bought a home without it, an official report has said.
However, they may not have been able to buy the house they wanted without the help, the report from the National Audit Office (NAO) found.

It also found that one in 25 of participants had household incomes of over £100,000.

The scheme did help boost the profits of building firms, the NAO said.

It was too early to determine if the scheme had delivered value for money for the taxpayer, the report said.

“Help To Buy has increased home ownership and housing supply, particularly for first-time buyers,” Gareth Davies, head of the NAO, said.
“However, a proportion of participants could have afforded to buy a home without the government’s help.

“The scheme has also exposed the government to significant market risk if property values fall, as well as tying up a significant public financial capacity.

“The government’s greatest challenge now is to wean the property market off the scheme with as little impact as possible on its ambition of creating 300,000 homes a year by 2021,” he said.

By 2023, the government will have invested up to £29bn in the scheme, tying up cash which cannot be used elsewhere,” the NAO said.

Bigger firms made the most of the scheme.

Between 2013 and 2018 more than half the sales in England made by Redrow, Bellway, Taylor Wimpey, Barratt and Persimmon involved Help to Buy.

‘Housing bubble’

Persimmon is the biggest beneficiary, with almost 15% of the sales made under the Help to Buy Scheme.

Persimmon saw its annual profits top £1bn last year.

Mike Amey, managing director of global investment management firm Pimco, has told the BBC that profit on a house sold by Persimmon had trebled since Help to Buy was introduced, “roughly from £20,000 to £60,000”.

Fran Boait, executive director of campaigning body Positive Money, said: “It’s now beyond clear that rather than helping those who can’t afford to buy a home, Help To Buy has mainly been a subsidy for a housing bubble, benefiting property developers and existing home owners.”

The government’s investment is expected to be returned from the scheme by 2032 after it closes in 2023. However, the size of the loans mean it is very much exposed to the performance of the housing market.

From April 2021, the scheme will be restricted just to first-time buyers.”

https://www.bbc.co.uk/news/business-48610977