Firstbuy scheme will require 5 per cent deposit
The shared equity scheme announced by the chancellor today will be open to first-time buyers earning less than £66,000 but will require a 5 per cent deposit.
The firstbuy programme will allow first time buyers to access to a 20 per cent equity loan provided jointly by the government and house builders. Previously, the scheme allowed buyers to take out an equity loan and mortgage to buy a property.
Chancellor George Osborne has pledged £250 million to the scheme. A figure of £210 million, which officials insist is entirely new money and has not been reallocated from elsewhere in the Communities and Local Government budget, will be available to England with the rest going to the devolved administrations.
The scheme, which will help 10,000 households over two years, replaces the previous government’s first-time buyer scheme, homebuy direct, which closed in the autumn. That scheme did not require a deposit from buyers, but lenders are understood to have requested a deposit element in firstbuy to ensure buyers take their responsibilities seriously.
Housing experts welcomed the funding, but said the government needed to do further work on addressing long-term supply of housing. Sarah Webb, chief executive of the Chartered Institute of Housing, said: ‘The £250 million fund is a useful short term boost, but it is important that we also address the fundamental question of how to sustain housing supply in the long term.
‘Measures to reform the planning system will have a more significant role in this.’
Campbell Robb, chief executive of Shelter, said: ‘This first time buyers’ package is the policy equivalent of a sticking plaster on a broken leg, and will have little impact on our housing crisis.
‘In fact today’s announcement will help less than one per cent of those struggling to get on the housing ladder, leaving them more likely to win a prize on the lottery than be helped through this small-scale scheme.’
David Cowans, chief executive of Places for People, said: ‘We are facing the severest housing shortage since the 1920s, so the government’s new firstbuy initiative is a welcome step in the right direction, but will only go some way to helping house the nation.
‘To make more homes more easily accessible we have argued that house builders need to look at greater tenure flexibility and offer a wider range of products and price points which people can move along, as their financial circumstances and personal aspirations change.’
Ian Fletcher, director of policy at the British Property Federation, said: ‘This package broadly makes sense, because it targets home deposits, and is about as much as the government could realistically do in current circumstances.
‘It is important that any government spending at this juncture is also supporting growth and jobs and we would like to have a seen a refined policy which targets such aid at homes yet to built or completed, rather than a means of house builders selling unsold stock.’