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Mortgage guarantee scheme supports just 250 sales

The government’s mortgage indemnity scheme has so far seen just 250 home purchases, when ministers are hoping for 100,000 sales.

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Data published by the Communities and Local Government today reveals 250 purchases had been completed by 30 June under the Newbuy scheme, which launched in March.

Under the scheme lenders make loans worth 95 per cent of the value of the property in return for security from the house builder and the government. This allows buyers to purchase homes with a 5 per cent deposit.

The government has not said when it hopes to achieve its 100,000 target.

Chris Cobbold, head of residential practice at consultancy DTZ, said: ‘It is no great surprise that only 250 home buyers have completed the purchase of their home using the Newbuy scheme, as it is still in its infancy. 

‘This is the normal pattern for new interventions in the housing market. It takes time for the lenders and house builders to get their systems in place, and for buyers to get their mind around whether this is a good deal.’

However others expressed concern about the government’s support for house building.

John Hitchcox, chairman of property firm yoo, said: ‘When you consider how many millions are on housing waiting lists, it’s astonishing that we still don’t have any proper action to help.

‘Ministers need to stop deckchair-shuffling and take some action. Getting housing moving is about easing the supply of credit and about getting the market moving.’

The Home Builders Federation said: ‘These figures do not represent the current position and increasing popularity of Newbuy.’

The CLG figures out today also showed by 30 June this year the government had not paid out any payment of claims to mortgage lenders for the guarantee scheme.

 


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