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Not strictly self build but I was interested in this scheme after one of the girls at work mentioned it. https://hophomes.co.uk/ 

Setting aside the 5% return which for the tenant (co-owner?) could be argued as high this does seem to be quite an innovative scheme?

Or am I missing something??

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  • Much due diligence needed, at least.
  • Was created less than 6 months ago. Essentially an investor buys 90%, you buy 10%, of house. You pay 5% interest to investor on their share, which increases at RPI (not CPI) plus 0.5% (which is the investor hook).You get an increasing % of the gain (not the capital itself) if you sell the house, but to increase your % you have to make separate capital payments.
  • It is all quite silent about ownership legalities and charges etc. eg what happens if the company goes bust?
  • Suspect the people running it make their money from fees to both sides, but needs much more digging.
  • The people running it have umpteen companies, but that is normal in property. It may be fine once you have understood.
  • Their illustration widgets seem to make overly personal claims for general calculators.
  • An opinion from @PeterW and @iSelfBuild would be instructive.
  • Personally I think it is just too intricate for me.
  • In this scheme compounding over years could have very big effects, and so if at all would be one to use then trade out with a traditional mortgage quickly.
     

F

 

Edited by Ferdinand

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5 hours ago, Ferdinand said:
  • Much due diligence needed, at least.
  • Was created less than 6 months ago. Essentially an investor buys 90%, you buy 10%, of house. You pay 5% interest to investor on their share, which increases at RPI (not CPI) plus 0.5% (which is the investor hook).You get an increasing % of the gain (not the capital itself) if you sell the house, but to increase your % you have to make separate capital payments.
  • It is all quite silent about ownership legalities and charges etc. eg what happens if the company goes bust?
  • Suspect the people running it make their money from fees to both sides, but needs much more digging.
  • The people running it have umpteen companies, but that is normal in property. It may be fine once you have understood.
  • Their illustration widgets seem to make overly personal claims for general calculators.
  • An opinion from @PeterW and @iSelfBuild would be instructive.
  • Personally I think it is just too intricate for me.
  • In this scheme compounding over years could have very big effects, and so if at all would be one to use then trade out with a traditional mortgage quickly.
     

F

 


Good summary and I agree with your thoughts.

The compounding effect (good for investors and bad for buyer/tenant) and how they make it work from a legal ownership point of view are the biggies for me.


 

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and who decides when it is time to sell it --bet there is a clause in there -which says the main investor can sell and just give you money --which means you could be homeless at short notice.which is what would happen if prices rocket in that area

 

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Sounds a terrible product for the 'homeowner' - all the responsibilities of homeownership with a sliver of the benefits, and at best static real terms housing costs to effectively rent what is pitched as your own home. And aimed accordingly at desperate people, with loans for income multiples that mainstream lenders rightly wouldn't stretch to. And therefore far too much risk for a measly 5% return for the investor. 

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