A former residential chairman of the Royal Institution of Chartered Surveyors has posed key questions for the government to answer over its proposal that ‘local’ first time buyers should be given 30 per cent discounts on selected homes.
Yesterday the government announced the idea in the Queen’s Speech, as part of a raft of measures to improve affordability of homes, bolster home ownership and strengthen the rights of tenants in the private rental sector.
The government calls the discount scheme First Home and, to some observers, it appears like a possible replacement for the Help To Buy scheme, which ends shortly and operated by lending first time buyers up to 20 per cent of the purchase price interest free for five years, is due to be phased out in coming years.
Jeremy Leaf, who also runs his own north London agency, says of the new proposal: “Discounts for first homes is a policy which is all about giving first dibs to local people as opposed to investors or foreign-based buyers.
He continues: “It’s very laudable, helping to build communities and reducing the risk of properties being left empty with the lights on or off. This is such a waste of resources when there is such high demand for property as supply has failed to keep up with household formations for so long.”
But although he welcomes the idea in principle, Leaf says the government’s detail-light proposal leaves questions unanswered.
“Local discounts are, in theory, a very interesting idea. Its success will be determined by the detail and how it works in practice. It sounds a bit like a shared ownership-type arrangement so it is not clear whether the discount will be portable if buyers change up or even if buyers trade down” he says.
“Questions that need answering include: as people move, will it be portable and how will developers be persuaded to sell at a discount? Will it be via housing associations or local authorities? Who will pay for the subsidy? And who is a local person - do they have to live in the area, work in the area, and will they be obliged to leave if they move out of the area or no longer work in it?”
You can see how EAT reported the announcement of the scheme here.
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I assume and I know this is dangerous, it would be a 10% extra help to buy option, for those first time buyers looking to buy locally. So, a 30% deposit repayable after 5-years, or paying the interest on it. This may not be the scheme, and it might be a post election soundbite, but at least housing is back on the parliamentary agenda, which is a refreshing change.
Having seen help to buy, being taken up by 61% of buyers who could have bought without it, there are big questions around its use, and does it inflate house prices, and has it helped a moneyed sector of society up another rung or two at the cost of others?
I quite agree. Whatever the plans are, they will have to make sense and work for the housing market as a whole. The last thing we all need is a scheme that effectively bolsters house prices.
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