The government have made significant alterations to two popular housing schemes and have showed their commitment to affordable homes in the budget 2013. Chancellor George Osborne in his speech announced ‘Help to Buy' an adaption of the FirstBuy scheme which will be available to all buyers of new buy homes.
He said in his speech to the House of Commons: "The deposits demanded for a mortgage these days have put home ownership beyond the great majority who cannot turn to their parents for a contribution. That's not just a blow to the most human of aspirations - it's set back social mobility and it's been hard for the construction industry. This Budget proposes to put that right - and put it right in a dramatic way."
Help To Buy will be similar to FirstBuy in that it enables buyers to put down a 5% deposit with up to 20% funded by a "shared equity" loan, which will be interest free for five years and will be repayable when the house is sold. The government has pledged £3.5 billion of capital spending over the next three years to shared equity loans.
It differs from FirstBuy in that this scheme will be open to all buyers of newly built homes and will cover properties up to the value of £600,000. Osborne said in his speech this value limit covers ‘well over 90 per cent of all homes'. There will also no longer be an income limit of £60,000 a year.
Another announcement made by the Chancellor was a new mortgage guarantee, with loans from High Street lenders underwritten by the government, for old and new homes - an extension of the NewBuy for the wider market.
HBF said of the announcement: "The announcement of a scheme for the wider market is a welcome step that should result in increased home sales across the whole housing market. The scheme will need the support of a wide range of mortgage lenders, for new and second hand, if it is to have the desired impact on the overall market and help boost new homes building."
If a borrower defaults, the government will step in to compensate the lender. The idea behind this is that lenders will be happier to accept smaller deposits as security for loans as the best rates are currently only available for those who can put down around 20% of a deposit. He said they are offering we're offering guarantees sufficient to support £130billion of mortgages. This mortgage guarantee will be available from the start of 2014 and run for three years.
Finally the chancellor also pledged that in the Budget Book, the government has set plans to build 15,000 more affordable homes.
Stewart Baseley, Executive Chairman of HBF says:"A lack of affordable mortgage availability remains the biggest constraint on housing supply, something Government now clearly understands and is looking to address...Extending FirstBuy is very welcome and will provide a real option for people currently unable to buy - so providing a vital market for the new homes industry. Building the homes the country desperately needs can be a key driver of economic activity. Government must be praised for its attempts to stimulate activity, but must also be wary to get the details right."
HBC Chief Executive Mike Quinton said: "The Chancellor has today given a welcome shot in the arm for the UK's housebuilding industry...Builders up and down the country have been working hard to build high quality homes while operating in tough economic times. Housebuilding fell 9% in 2012 compared to the previous year. It is therefore great news that housing has been the centre piece of this Budget.This is a positive step for homebuilders and homeowners alike."