Revived Help to Buy scheme to be revealed in Budget
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.”
Tim Foreman, Managing Director of Land and New Homes at LRG, says: “Your First Home is a welcome response to a gap in housing policy.
“Planning reform can increase the number of homes approved, but developers also need confidence that people can buy them. Helping first-time buyers with the deposit and reducing the size of their mortgage could give more households a route into ownership while supporting the sales needed to get new sites building.
“The Budget details will determine how much difference the scheme makes. Income and local price caps must reach buyers who need help without excluding too many in higher-cost areas, and the terms must encourage developers to participate.
“Buyers also need to understand from the outset what the equity loan will cost and how they can repay it. If the scheme gets those points right, it could help turn more planning permissions into homes.”
Katy Davis, National Head of Planning, Carter Jonas, says: “Your First Home is a welcome acknowledgement that first-time buyers need more than an increase in the number of homes planned. An equity loan could make a new home attainable for people who can manage the ongoing costs but have struggled to save a deposit.
“The test will be whether the scheme reflects the very different markets across England. If local price caps are set too low, buyers could find there are few suitable homes they can actually purchase with it.
“The Budget must also make the longer-term cost of the equity loan clear, so that buyers can judge whether the help they receive at the outset remains affordable later on. Get those details right and this could be a useful addition to the routes into home ownership.”
This will not work, this will only boost housebuilders profits who in turn sell over priced properties making the problem pushed down the line, the better idea would be to make this scheme available to FTB across all homes.
This will help boost the economy as upsizer will be able to sell and so will down sizer. Having it just for new builds its a sham and a headline grabber
Absolutely agree this must be aimed at the second hand market and further Housing Associations and councils should buy from the second hand market. This would save billions for the government and the building industry. The money taken from builders for “Affordable houses” has been responsible for the total distortion of the once profitable residential house building market.
No-one wants to buy flats at the moment at all.
This absolutely MUST be rolled out across the secondhand residential homes market at the same time. First time sellers are still lumbered with the over-valued new homes that the last HTB scheme stuck them with. The developers are the ones who benefit most from this scheme and it doesn’t help FTB’s in the long run as many sellers will tell you right now. If the New Homes properties were priced correctly they would be selling now but many of them are already over priced but will look good with this new ‘Scheme’ in place like last time. Keep developers honest by rolling it out over secondhand homes. It’s just so OBVIOUS who the government are really trying to help here otherwise it would be across the whole market. Opening it up to all those sellers trying to move on will also start to get the entire housing market moving rather than there being no chain reaction. Can’t anyone else see what’s going on here??!!
100% agree