Help to Buy scheme to be revealed in BudgetRevived
Housing Minister Matthew Pennycook says the Government is stepping in to support those who can’t rely on help from the bank of Mum and Dad.
The Government has confirmed plans for a new version of Help to Buy for first-time buyers.
The Ministry of Housing, Communities and Local Government (MHCLG) announced over the weekend that a new equity loan scheme – Your First Home – in England will be confirmed at next month’s Budget.
Rather than a 5% deposit required under Help to Buy, it is expected to support 2.5% deposits, backed by 20% government-backed equity loans, for prospective first-time buyers purchasing a new-build property from a developer signed up to the scheme.
We’re acting to support those who can’t rely on help from the bank of Mum and Dad.”
Similar to the Help to Buy Equity Loan scheme, people will be able to access equity loans with an initial interest free period.
The scheme will also set a household income cap with local property price caps, the detail of which will be set out at Budget.
State stimulus
A MHCLG statement says: “With the new build housing market currently facing challenging headwinds driven by international economic pressures and rising construction costs, the scheme will also act as a much-needed stimulus to support the market and boost housing supply.
“Developers will be expected to make a contribution when signing up to the scheme to help cover costs.”
Housing Minister Matthew Pennycook (pictured) says: “We’re acting to support those who can’t rely on help from the bank of Mum and Dad.
“Our Your First Home scheme will help more families get their first rung on the housing ladder with a deposit of just 2.5%.
“Less to save upfront and a 20% equity loan to bring down monthly costs.
“With pre-registration set to open by the end of the year, help is on the way for first-time buyers.”
Further details, including costs and implementation timelines, will be announced by the Chancellor at the Budget next month.
It comes as a Government review of Help to Buy earlier this month concluded that the scheme did provide value for money in the early stages until more lenders begun offer low deposit mortgages.
Industry reaction
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: “The deposit is the biggest barrier to many first-time buyers getting onto the housing ladder if they don’t have the help of the Bank of Mum and Dad. So any assistance here will make a real difference to those struggling to buy on their own.
“However, let’s not forget that Help to Buy worked best for house builders, not so much for first-time buyers.
“Extending a scheme to all homes would be so much better than simply targeting new builds, and I cannot see a huge issue in doing so.
“That said, any stimulus for the housing market is a good thing. The market is flat and needs some intervention to kick start it. More activity and an increase in transactions would benefit not just the housing market itself but the many connected industries and wider economy.”
Alex Slater, Rightmove’s Director of New Homes, says: “Any measures that help more first-time buyers access home ownership are welcome, particularly at a time when housing developers are facing some of the toughest market conditions in years.
“Our data shows that the number of new housing developments coming to market has fallen to its lowest rate on record, highlighting the challenges facing the sector.
“Developers continue to manage a combination of viability pressures, affordability constraints and competition from a high level of resale homes on the market. Support should focus on helping to unlock greater affordability, improve confidence to bring forward new developments, and support the delivery of much-needed new homes across Britain.”
