Here at The Big Property List we have been highlighting some of the issues facing first time buyers who are trying to get involved in today’s housing market. Quite often, it can be a real rollercoaster ride if you’re in this position and this weekend summed that up perfectly. On the one hand there was good news as more details emerged with regards to the Government’s First Buy scheme but there was a warning that it may not be the breakthrough that many buyers were hoping for.
Essentially, FirstBuy will allow homeowners who are able to put down 5% as a deposit to take out a mortgage at just 75% of the cost of the property, with a shared Equity loan being made available for the remaining 20%. The first properties will be made available from September and the qualifying household income must be less than £60,000. At first glance, the news seems to be the perfect answer for those struggling to get a foothold on the ladder but there are some disadvantages.
FirstBuy only applies to new homes and that fact alone rather limits the choice. Although it’s not exactly a hardship for a first time buyer to ‘settle’ for a new property, if there aren’t any new developments in your area it does restrict your options. Moreover, it’s likely to mean that demand will outstrip supply and that is already being seen in London where the money that has been made available is only likely to help around 940 buyers.
Property developers have however welcomed the scheme and it’s believed that up to 100 companies will lend their weight to the Government’s initiative. Taylor Wimpey, Barratt and Bovis are among those taking part.
Meanwhile, four lenders have so far indicated their intentions to back the scheme with Nationwide, Halifax, Melton Mowbray Building Society and Barclays expected to be joined by around 16 more providers.
There is no indication that there will be help among those lenders for those with a less than perfect credit history. While there may be help for those with a chequered credit past under the Homebuy Direct scheme, there is no indication as yet that FirstBuy will assist in any way.
The whole project has been met with some cynicism and it’s felt in some quarters that it is merely a scheme to help developers clear overpriced properties. For many buyers however, this could be the answer they’ve been waiting for, providing that the meet the criteria.