Thumbs up for Help to Buy housing scheme
THE Chancellor delivered a much needed shot in the arm for Britain’s homebuyers and housebuilders with his new Help to Buy scheme.
The Help to Buy scheme improves on a previous scheme known as FirstBuy. It enables buyers to purchase their home without saving up a big deposit, but just putting down a 5% deposit on a home.
Coverage of the Budget is brought to readers of TheBusinessDesk.com in partnership with Ernst & Young.
Shares in Redrow, the North West housebuilder, rose more than 4% on the news.
Up to 20% of the cost of the home is funded by a “shared equity” loan, which will be repayable when the home is sold.
The remainder is paid for with a standard mortgage.
Whereas the previous scheme was only open to first-time buyers, this one will be available to all buyers. It will cover homes up to the value of £600,000.
Martin Portnoy, tax partner at Ernst & Young welcomed the £3.5bn scheme, which he said represented a return to Thatcherite values on home-ownership.
“It appears to be a sensible and well thought through plan, and one that will help get the property market moving and of course give a shot in the arm to the construction sector.
“It will also have a multiplier effect on the wider economy too.”
Rob Arnison, partner in the real estate group at law firm DLA Piper said: “Anything that’s helps to encourage residential development, new building and the construction industry has got to be good for what is one of the most important sectors of our economy and a bellwether of people’s confidence in the economy and their personal finances.
“I particularly welcome help to those struggling to buy properties, or even starting to get on the property ladder, with the extension of shared equity schemes, interest free loans and the Treasury guaranteeing what could be up to £130bn of new mortgage lending. The devil is always in the detail but it must be a move in the right direction and is welcome”.
Andrew Garvie, partner and head of residential property at Manchester law firm JMW also welcomed the scheme.
“The exact details will be of interest as to implementation and eligibility but on the face of it this will open up the market for those perhaps stuck by a fall in house prices or those not able to raise enough to be given a mortgage.
“Based on average house prices the injection could help up to 100,000 house movers which is considerable based on average Land Registry figures for the North West of 5,000 to 6,000 per month in 2012.”
