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.

Government Answers Call for New Build Measures

Last week, the Home Builders Federation (HBF) announced a welcome to new housing minister Mark Prisk while urging the MP for Hertford and Stortford to act quickly to protect the interests of domestic property building firms across the country.

Meanwhile, David Cameron and Nick Clegg have responded to calls within the industry to aid housing growth by announcing new proposals which will inject cash as well as addressing the question of restrictive planning laws.

“We hope he (Mark Prisk) will offer some radical ideas to transform the current housing and planning systems and tackle the housing crisis, providing economic growth and jobs, and strengthening communities across the country,” said Stewart Baseley of the HBF last week.

In the separate announcement, the UK’s coalition government claim that their brand new package of measures will create up to 70,000 new properties including a significant proportion of affordable new homes for first time buyers.

The proposals will also aim to create around 140,000 jobs in the sector as the government aims to inject £40bn into infrastructure projects. It will also look to reduce the obstacles put in the way of new homes and will allow developers to sit down with local councils and re-negotiate agreements on affordable homes.

Speaking on daytime television Mr Cameron said,

“Frankly we had a situation where the lenders did not want to lend so the builders could not build and the buyers could not buy. We are talking today about 140,000 jobs provided by building an extra 70,000 houses.”

Nick Clegg added that the scheme would simply make it cheaper for developers to build.

“If you are finding it too expensive to raise money yourself to put shovels in the ground to employ on construction sites and build homes for private rent and to build affordable homes we are going to make it cheaper for you to do so,” he said.

Predictably however, Labour’s opposition has criticised the government’s actions on new homebuilding as a whole.

“We need to get Britain building again, but the government has slashed the housing budget and the number of affordable homes being built is down by 68%,” said Rachel Reeves, shadow chief secretary to the Treasury.

“The fundamental problem is not the planning system or Section 106 agreements for much-needed affordable housing, it is the lack of confidence and demand in the economy, slashed public investment and the government’s failing economic plan.”

However, the Prime Minister is adamant that this shows a clear commitment from the government to address any problems and to meet the demand for new housing.

“The measures announced today show this government is serious about rolling its sleeves up and doing all it can to kickstart the economy. Some of the proposals are controversial; others have been a long time in coming. But along with our housing strategy, they provide a comprehensive plan to unleash one of the biggest home building programmes this country has seen in a generation,” Mr Cameron concluded.

The Benefits of Choosing New-Build

Decreasing property prices and incentive driven schemes have left many feeling that new-build might be the answer when it comes to moving home.  More developers are now investing money in new-build properties and are giving a helping hand to first-time buyers and existing homeowners.  If you are looking to move in the near future, there are many benefits to choosing new.

The best thing about buying a new property is that you are the first to live there.  That means you get to choose some of the finer details of the property such as kitchen units, carpets, bathroom fittings, and many other aspects that allow you to put your personal stamp on your new home.  Choosing furniture for a completely new home is an exciting and liberating experience as you have no clashing décor to worry about and you can use your home as a completely blank canvas.  Previously owned properties usually need a large amount of redecoration or revamping.

When you buy a new home you also have a great chance to make it as environmentally friendly as possible and many such features come as standard.  New homes have to satisfy a number of regulations with regards to energy consumption and don’t suffer half as many problems as older properties do.  For example, an older property may lack good quality windows or have problems with the roof.  Both can let heat escape and this means a larger carbon footprint for you not to mention higher heating bills!  Moving to a new home also gives you the chance to review other areas of energy consumption such as appliances.  Spending out on new energy efficient appliances is a smart move that will pay for itself very quickly.

Older properties often require a lot of repairs and renovations.  Indeed you may be up for the job, but many people prefer to move straight into their new home without endless DIY projects threatening to take over every weekend for the foreseeable future.  Moving into a new home means you avoid the hassle of arranging repairs and also the expense.

The housing shortage problem in the UK has made the Government sit up and take notice.  As a result there are many incentives being launched to help existing and first time homeowners to move home and improve the economy.  You will often find new homes are discounted or that developers offer to pay your deposit or your stamp duty.  There are also good mortgage deals offered by lenders working in conjunction with house developers as an incentive to buy.

Build it Yourself? 1 in 3 Would!

You may have considered building your own home yourself or know somebody who has taken the plunge.  More and more people are starting to take up the challenge in a bid to build their dream home and a more efficient living space.

A study conducted by Norwich and Peterborough Building Society has revealed that one in three people in the UK would think about building their own property in the next five years.

The research has shown what could be strong demand for more self-build projects in the near future with 12% of those questioned saying they would consider undertaking the project in the next 12 months.

So, what’s the big attraction with self-build?  It seems the most important draw is the freedom to design and build a home to meet the needs of the individual.  Around 25% also said they liked the idea of self-build being cheaper than buying an established property of the equivalent size and location.

One fifth of those questioned also said they were attracted to self-build because they could build a much more energy efficient and environmentally sound property.

Richard Barker, mortgage manager at N&P, said: “Self-build is a market with huge potential which could have many benefits for those willing to carry out a self-build project.”

N&P said that those who choose to enter the self-build market are usually ardent property developers or those in their 50’s who have significant funds to build their own homes.

The National Self-Build Association reported that over 15,000 people choose to build their own property in the UK each year and that the market is worth around two billion pounds which equates to 1.4% of the mortgage market in the UK.

The Government is now looking to increase that figure to 50,000 homes annually across the next few years by launching a number of initiatives to make self-build more appealing.

Barker said: “It’s definitely a tall order for the government, but it does have the backing of the National Self Build Association, which has the same goal.

“In addition, Housing Minister Grant Shapps is also looking to open up self-build to more people and is holding working groups to discuss how to finance it. This should all help towards boosting the market.”

If you are interested in building your own home we’ll be publishing a guide later this week that will tell you how to get started, the pitfalls, the advantages, and details about costing.

House Building Industry on the Rebound?

According to the Department of Communities and Local Government, the house-building industry has showed signs of recovery during the first quarter of 2011.  The number of new build properties in development has risen by 26% with a total of 29,140 being started during the three months to the end of March.

However, commentators are still warning that whilst the house-building increase is good news, it was likely the number of building starts in the previous quarters were affected by seasonal inclement weather.

Also, the number of new build properties currently started is still half the level that is required to satisfy growing demand.  The credit crunch hit the house-building industry very hard with developers struggling to raise or secure the finances required for each development project.  This resulted in many sites being abandoned or mothballing whilst many developments never even got off the starting line.

Simon Rubinsohn, Chief Economist at RICS, said “We’ve seen data released this morning which shows a welcome rebound in housing starts in the first quarter of this year, but this increase largely reflects a recovery from the weather-induced weak reading for the final three months of last year.

“Even allowing for this improvement, the underlying picture still remains a cause for some concern. The trend rate in delivery for housing starts is currently running at little more than 100,000 per annum, against estimates of new household formation running at more than double this figure.”

Since the beginning of 2009, the number of new homes being started has been gradually rising in spite of the dip that was experienced in the second half of 2010.

A total of 105,930 homes were completed during the year up to the end of March.  This figure was 7% down on the previous 12 months and approximately 60% less than before the credit crunch hit.

London saw an increase of 52% with regards to new homes being started whilst the South East saw the largest number of properties being started at 19,740.  Compared to the same time in 2010, the number of new build homes has fallen in the North West, North East, Yorkshire, and the West Midlands.

Help has been promised to house builders from the Government.  Housing Minister, Grant Shapps, said “Today’s figures are welcome, but they are only the start of the story.

“The construction industry building the homes this country desperately needs can also expect more help.

“We will work closely with house builders and listen to their suggestions about how we can improve, and continue to strip away the bureaucracy and red tape that for so long has piled unfair costs on this vital sector of our economy.”