Key workers scheme using Tower Homes

Don't know if it's really a catch. but isn't it a bit "Heads I win tails you lose" from Tower Properties point of view. If the bottom drops out of the property market and the property sells next for 120k they'll still want their £50k back and you'll take the whole £60k loss. A building society would still want their capital back but they'd not get any of the profit if and when there was any.

I can't imagine them paying any of the maintenance or insurance costs of the property either.

Another thing to consider is it's not really getting you up the property ladder. In 15 years time if you sold up, and settled up with Tower Properties would a similar deal still be available, would it be available somewhere else you might want to move?

Fair enough I suppose since it's about getting you housed not about helping you to make money out of property.

DG

No - they only get 28% of the increase - so if you bought for 180K and the property went up to 200K, they would only get 28% of 20K - so they would get 5,600. And they would only realise that on sale of the property and if your next home wasn't under the Key Worker scheme. In such a case, they would get 55,600 which would be repayment of the original "loan" of 50K plus 5.6K "interest".

Of course, in these days of big house price inflation, you might bedrudge having to pass over any of the increase in value (it's easy money for them), especially if you have forked out a lot of money to improve the property, as you would only get 72% of any return.

The biggest drawback I see under the scheme is that if you ever left the public service job you work in, you would have to repay the loan - it's unlikely anyone would get a new job in the private secter that would pay more than enough to enable somebody to do that. The system may force people in to public sectar jobs which long term, they don't want to stay in.

You do have the opportunity under the scheme to repay back the loan in chunks of 5% at a time, which you could do by increasing your mortgage over time - you could probably afford to do this if you're an NHS worker as your salary for next year will increase by at least 3.225% and will probably increase substantially more under "Agenda For Change" - of course, I don't know where you work so that's just speculative.

Is this in all circumstances? Say the occupier doubled the size of the house through extensions - I assume they still get the full share of the increase - is there the ability to pay back this loan without having to pay the increase, I see your 5% bit below, but aren't clear on it.

The main situation I'm imagining is the where you have a couple one eligible, the other not, using the 50,000 purely as a way to minimise cost.

Jim.

"Neaco" wrote

Bingo! Making you a member for life of the New Liebour public sector salariat.

In message , Derek writes

Apparently they take a loss if the marjet drops because the loan translates toi a percentage of the propertry ie 28%. So if it is worth less then their loan is worth less.

Thats a fair point. Am I realy getting onto the property ladder? One issue is that if I decide to change career and become a........ estate agent (no!) a.......... copywriter(no!) ......Or whatever I have to pay back the loan within 2 years

Yes I suppose I would have a house/flat for as long as I chose to be in the key workers professions, and at a higher level of property.

...........................And I still feel uncomfortable.

George

In message , Neaco writes

Yes I thought that. If I had enough money to invest £50K into somebody who worked in the public sector ( I work in Social Services) and was able to get a secured loan at a guaranteed 5% or whatever in the current housing market, then I think its a good scheme

I know. Who stays in the public sector. But the arrangement is such that you have to be out of it for two years you repay the loan. I suppose after two years in the current private sector market I might be glad to get back in to the public sector. :)

I didn't know that. I suppose we are being taken over by the NHS and I thought it was all bad...... perhaps not ;)

Thanks for the feedback

George