Estate agents and home builders are counting themselves among the beneficiaries of the Chancellor’s new ‘Help to Buy’ scheme.
The scheme will help not just first-time buyers of new homes, but all buyers of new homes. It will also help buyers of all homes, including secondhand stock.
The Help to Buy programme has two key components.
First is the expansion of the FirstBuy shared equity scheme for new-build properties, which kicks in on April 1 and will run for three years. It is available to any buyer of a new property that has a maximum purchase price of £600,000.
The borrower will need a 5% deposit. The Government will lend 20%. The remaining 75% will come from mortgage lenders.
While this scheme applies only to new-builds, the second part of Help to Buy kicks in next January and will be open to all buyers of both new-build and existing homes. It will also run for three years.
A mortgage guarantee scheme, it replaces and extends the NewBuy scheme where currently the mortgage guarantee is co-funded jointly by the Government and developers. Under Help to Buy, the mortgage indemnity will be provided solely by the Government.
Borrowers will need a 5% to 20% deposit, meaning they will be able to borrow up to a 95% LTV mortgage. The Government guarantee will cover the remaining amount above 80% LTV. The maximum purchase price will again by £600,000.
The Treasury has produced some useful illustrations on how the scheme works. See the link at the end of the story.
News of the extension of the mortgage indemnity scheme to existing housing stock from next year was greeted with enthusiasm by Paul Smith, CEO of Spicerhaart.
He said: “It was good to see that the Chancellor has been listening to the concerns of house buyers and through the Help to Buy scheme is offering some much-needed financial support.
“In a clear homage to Margaret Thatcher’s Right to Buy scheme of the 1980s, the Government will provide billions in guarantees to support anyone struggling to either get on the property ladder, or move up the property ladder, for that matter.
“The fact that such a scheme is not limited to just new-builds for first-time buyers but buyers as whole has to be warmly welcomed as this opens up the scope of the scheme to so many more people than previous initiatives, and with it, the potential to build on the green shoots of recovery that we’ve been seeing in the UK housing market in recent months.”
Rightmove said that the £600,000 limit meant that buyers and sellers of nine out of ten properties on the market –97% of new build stock and 93% of secondhand homes – could benefit from the scheme.
Agent Alan Robinson, of the Robinson Jackson Group, in south east London and Kent, said that Help to Buy should prove a winner. He said: “We have been crying out for help, and the Chancellor has finally delivered some good news. The idea that loans from high street lenders will be underwritten by the Govenment for three years should encourage them to lend to buyers with smaller deposits and adjust interest rates to be more affordable.
“This £130bn underwriting package, that comes into effect at the start of 2014, should open the floodgates for buyers currently priced out of the mortgage market.”
However, Jon Hall, CEO of Saffron Building Society, was more guarded. He warned: “At the heart of the problem is a lack of housing at the right price, and it’s questionable whether these initiatives tackle this head on or add further potential distortion into the mortgage market.”
www.hm-treasury.gov.uk/d/budget2013_help_to_buy_infographic.pdf
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Comments
Listen son (you very well could be)
Haven't you worked out or noticed that the builders have not been building for the past 4 years, they have banked their land waiting for this opportunity.
Check out the link - it's excellent. Lots of queries at the moment - public and staff - show them the info-graphic - simples!
@ste - " slow till January" hmmm not sure about that myself - prices had started to tick up even before georgy porgy loosed the accelerant. My money says that it's going to get very busy right away with buyers who "can" wanting to get in before the floodgates open in January and prices really start to "sizzle"
Homer
We are talking about the budget. The Chancellor has said he will help get around deposits on new build. You said BTL would push to the front of the queue and I said they can't. Now under a stupid name you are saying they can buy new build, what planet are you on? They can do that now, last year, any year anytime. We are talking about the help for first time buyers. INBRED.
The only good side of this ill-advised gamble with taxpayers' money is that it will burst the buy-to-let bubble once and for all.
Why? Because the new 20% loans on new builds are restricted to owner-occupiers - so every new house sold in this way will reduce the demand for rental property by at least one unit without a corresponding reduction in supply.
The other part of the deal, i.e. the mortgage guarantees coming on-stream in a year's time, will have little affect on the rental market as they will reduce both supply and demand for rental properties by equal amounts.
The net effect? Rents will go down at the same time as prices are pushed up. Making yields even thinner than they are now.
Then interest rates will go up...........POP!
PS the election will be out of the way by then so the Tories won't give a flying one.....
Just got the new Zoopla prices in, they are nearing RM with their prices, we wanted a rival now we have one with matching fees!! Time to leave me thinks!!
The scheme proposed might not be open to BTL but the new builds are not being built exclusively for "the Scheme"
OOooh, Oooooh give us planning for the government scheme then we can build some new homes.
Then quietly sell them to their Build to let mates who are not reliant on government handouts.
Best you stop casting insults about inbreeding, coming from Norfolk it might be rife in them parts but you might find that it is wealthy inbreds that are actually benefiting from this bonanza.
The builders will benefit from the build, the investors will benefit from renting them out, say otherwise and are you really are very naïve.
I am very glad you are not, you have something more valuable than that very big bung, integrity and respect.
What are your thoughts on those lobbying for regulation of the lettings industry as a way of handicapping competition that chooses not to belong to RICS, ARLA, NALs or NAEA?
They are just as bad in my opinion
Read it.
That was the point I was trying to make with regards to On and On and On's comment. It obviously states January 2014.
@ LOL
.
Perhaps you should practice what you preach and read the link as it clearly states its Jan 2014.
Inbreeding hmmmm
If I want to sell my house and need to sell it at 150000 at the moment to get a 10% deposit on the next please, then I can bring it down 5% to 142500. The house will sell for less, have more chance of selling as it is a more reasonable price and I will be able to get a mortgage witrh my 5% equity. Simple.
? - More imbreeding mate?
It may bring prices down, someone with 10% equity not being bale to sell, bring the price down 5%
Oh I wish I were a Parliamentary Lobbyist for the house-building industry, I would have woken up this morning with the prospect of city-banker-sized bonuses being gently inserted into every orifice!
On and on and on you talk total rubbish. It is not a subsidy is is just a guarantee, you still have to pay for it and prove you can afford it. It will help some but it is unlikely to stop those with a deposit buying in the meantime in fact they should buy now if they think demand is going to jump in 2014. - Exactly what we need, you turnip.
Homer - it is not open to Buy to Let, the banks are lending and will check it is for main home same as they always do.
Where do these people come from. Too much inter breeding.
How many chains are started by purchasers buying new build property? None
2nd steppers were just dealt a massive blow to their chances of selling anytime soon along with all those reliant on the subsequent chains.
Who is going to be buying up all the new builds? without regulation to stop them Professional landlords and Investors with cash or finance already in place will be at the very front of this queue.
This budget simply green lighted a very unhealthy collusion with the building bosses and their investors!
2014 would mean the tax year unless they clearly state that it's January 2014.
I thinks someone isn't reading it at all never mind reading it wrong.
People are reading this all wrong. The govt are trying to deflate the property market but cannot do so openly. So they announce a measure to 'support' the market which will actually undermine it; Who in their right mind will buy property now when a govt subsidy is a year away?
Nobody. Sales this year will dry up because of this and only those desperate to sell will find purchasers. This will affect the averages causing them to fall. Well done LibCons, brilliant planning.
(Incidentally, 2014 means the tax year so its from April not Jan; more than a year away.)
Seems to be yet another desperate measure by a Government panicking about the effects of the imminent collapse of an overheated property market.
Looks like good news but depends on two linked issues.
First is jobs and the status of the would be buyers. And bear in mind pay rises and bonuses for anyone except senior bankers seem to be off the agenda for about 5 years, especially local government workers, probably closely followed by police and nurses etc
The second is interest rates.
I see no mention at all so far of whether they are fixed, cap and collared or anything at all. BoE seems to be instructed to keep base rate at zero for the next three years but as my family has discoverd in the last 6 months there is now no relationship at all between BoE rate and whatever a lender charges.
If the economy really does go to hell in a handcart over the next three years the Govt i.e. taxpayer us could be picking up a hefty bill.
Hope it works though - heaven knows we need something to get the economy going
So first time buyers who want to buy a second hand home have to wait till January 2014..........slow market till then me thinks!! Another Govermental monumental cock up.