The Sunday Times recently wrote a scathing attack on the impact of Help to Buy on house prices and the risks of negative equity in certain parts of the country.  The reality is that there has always been a “new build premium” representing the price gap between comparable properties in the same locality one of which is new the other second hand.  In history this premium has moved from around 5% to as high as 20%.  Not a new issue and only a problem now where you are looking to sell or dispose of the governments interest in your home.

In the articles the premium was cited as about 15% with some builders accused of inflating the prices of properties eligible for Help to Buy support.  All “incentives” are meant to be included in the builders CML disclosure form and the valuation should have given the consumer some comfort on the price to be paid.  Of course where the only valuation completed was for the lender and the customer enjoyed conveyancing funded by the builder or the lender then the conflicts of interest should have been assessed and managed.

It s against this back-drop that the consumer lobby continues to ask for the introduction of a new “Duty of Care” to be imposed on firms.  With this and the leasehold houses crisis we may have a new generation of prisoners just as we release the last generation.

Robert Sinclair
September 2018