George Osborne's budget for 2013 has provided a glimmer of hope to many people hoping to make their first step on to the property ladder.
The new "Help to Buy" scheme will mean that buyers with a 5% deposit can get another 20% from the Government; this 20% will be in the form of a loan which is interest free for the first 5 years. This new scheme will be available to buyers of all newly built homes, not just first-time buyers as the FirstBuy scheme was. This means the scheme will also help second-steppers, who have wanted to move up the housing ladder.
A "Mortgage Guarantee" scheme was also announced, whereby the Government will guarantee just under 15% of a mortgage. This means that if a borrower's property is repossessed, the Government will suffer a proportion of the losses suffered by lenders. Hopefully this will incentivise lenders to give those with smaller deposits better mortgages.
Chancellor George Osborne told the Commons that: "The deposits demanded for a mortgage these days puts home ownership beyond the great majority, who can't turn to their parents for a contribution." Not only has this hindered people who are struggling to take their first step on to the housing ladder, it has also had a damaging effect on the construction industry. The new schemes have been introduced to try to tackle this problem.
Whilst these schemes have largely been welcomed, the Royal Institute of Chartered Surveyors has voiced concern that this could lead to another housing bubble. Currently though, any boost to the construction industry will be warmly welcomed after the stagnant market they have recently been operating. This follows the decreased demand for new homes, stemming from the banks demand for bigger deposits from homebuyers.
For more information about selling and buying properties please contact Richard Wootton on 02392 296 296 or emailRichard.wootton@largeandgibson.co.uk