More help for First Time Buyers

The Minister for Housing (Caroline Flint) this week launched a document entitled “Facing the Housing Challenge: Action today, innovation for tomorrow”.

Introducing the document to the House of Commons she said: ‘We know that the vast majority of people aspire to home ownership. This is more than an economic calculation—it represents their hopes and dreams for their families. Across Government, we value and support these aspirations. We are absolutely committed to making sure that everyone can find the housing that meets their needs.’

The Financial Times reported that First-time buyers ‘will be able to rent homes cheaply while they scramble to raise enough money to buy them’ under a new initiative.

The “rent now, buy later” scheme will be available to first-time buyers with a household income of less than £60,000. They will be able to rent a house for 80 per cent of rental market value over a period of up to three years, to buy them time to save for a deposit to purchase a share in the home.’

TBPL View:
First Time Buyers have been kept out of the housing market in recent years due to high property prices in relation to earnings. This has recently been compounded by low mortgage availablity due to the global credit crisis. In spite of the government view this may not be a bad thing as it may protect first time buyers from over-extending themselves with a big mortgage at the start of a period in which house prices are predicted to fall and there are concerns about the wider economy.

First Time Buyers may be wise to wait out the current drop in the market (even if they can find an affordable propery and attainable mortgage) and see if house prices continue to fall as predicted this year. But if you can rent at a discount under the new scheme for 3 years – it may be worth considering.

Sources:
Hansard (Official Parliamentary record) 16/7/08
Financial Times 17/7/08