New Buy Scheme Slow To Take Off

The Government’s New Buy Scheme was launched in March amidst a great fanfare and hopes that the plans would give the property market a much needed boost. Six months on however, the first set of purchase figures have indicated a slow start to the scheme.

In the four months from the launch of the initiative, only 250 homes were sold through the scheme. Overall, the coalition were looking to help 100,000 people move by the end of 2015. Writing in his newspaper column in January, the then Housing Minister Grant Shapps underlined his hopes for the new buy project.

“At the heart of the (government) Strategy is a new-build indemnity scheme, which will offer a useful alternative to the Bank of Mum and Dad for those people struggling to get deposits together and take a step on the housing ladder,” Shapps wrote.

“Due to be launched this Spring, under this new industry-led scheme house builders and we in Government will provide security for the loan, enabling homebuyers to secure mortgages on newly-built homes with just a five per cent deposit”

The headlines surrounding the news suggest that this is a big blow for the government’s plans but as a spokesman for the Department for Communities and Local Government pointed out, the average house purchase takes around six months to go through and a significant proportion of reservations aren’t shown in those initial figures.

“As the Home Builders Federation have recently reported, 1,500 reservations have been made through NewBuy and at least 25,000 additional new homes will be built as a direct result of the scheme,” the Spokesman said.

The Home Builders Federation are also standing behind the scheme and they indicate greater interest from lenders and property developers since the launch back in March. At that stage, only seven builders and four lenders had expressed an interest but this has risen to six lenders along with thirty developers.

“People weren’t aware of it – it’s a completely new scheme,” said Steve Turner, spokesman for the HBF.

“Take-up in the past few weeks has markedly increased, to about 100 reservations a week.” He said take-up had been similar to the previous government’s FirstBuy scheme, which was regarded as a success.”

Predictably however, the opposition government has criticised the initiative in the wake of the new figures and is suggesting that the planned target for 100,000 purchasers by 2015 is way off course.

“The government needs to drop the hype and change course by implementing a real plan for homes, jobs and growth,” said Shadow Housing Minister Jack Dromey.

“If it fails to do so, at this rate, it will take 200 years for NewBuy to help 100,000 homebuyers buy their own home.”

Whoever is right or wrong in this argument, it seems that it’s far too soon to be judging the New Buy Scheme after just four months.