By Marc Da Silva
Chancellor George Osborne today announced new measures to boost mortgage lending in a bid to help more people to buy their own homes.
FirstBuy, which was aimed at first-time buyers on an income of up to £60,000 per year, has been replaced with a ‘Help to Buy' equity loan scheme available to all homebuyers looking to acquire a new build home up to a value of £600,000, with a deposit of just 5%. Mr Osborne believes that the initiative, which will run until 2016 from next month, should unlock a further £3.5bn.
The Chancellor also announced a new mortgage guarantee scheme, which extends the previous NewBuy Guarantee initiative to include older residential properties as well as new-build homes, which he hopes will significantly increase lending to purchasers, boosting property transactions in the process. The scheme is aimed at buyers with insufficient deposits to access a mortgage with a 5% deposit, on the condition that they earn enough income to fund mortgage repayments. The scheme will start in January 2014.
This is what members of the property industry had to say about today's announcements:
David Barnett, Londonewcastle, commented:" Londonewcastle warmly welcomes the chancellor's announcement on ‘help to buy' - opening up the scheme to all incomes up to the maximum property value of £600,000 on new build properties will really help people finally move up the ladder into a quality two or three bed unit in attractive Zone 2 developments like Londonewcastle develop."
Tom Nicholson of Linden Homes said:"We are looking forward to receiving the full details, however we are delighted to see yet another proactive initiative from the government. We have seen other schemes work successfully up and down the country, including First Buy and NewBuy. These revised plans now open up the options for even more people to get on the ladder, or make that all important next step up.
"This support from Government will boost the national economy and the housebuilding industry, and help fulfil the demand for more housing in the UK. The revised income criteria will be well received by customers, who previously haven't been eligible for the currently available schemes.
"We also interested to learn more about the new mortgage guarantee system scheduled for 2014, which will help families who have previously wanted to take out a mortgage on a home but need some extra support.
"We believe this announcement will bring another welcome boost to general confidence, and get the housing market moving consistently in the right direction."
Philip Hogg, Chief Executive of Homes for Scotland, said:"The far-reaching benefits associated with home building are well recognized so we obviously very much welcome the focus, long overdue though it may be, given in today's Budget, with the key points of the Chancellor's Help To Buy initiative being a £3.5bn boost to shared equity schemes in England and a guarantee to support £130bn of mortgage lending across the whole UK housing market, which we believe are likely to have a major positive impact.
"The Chancellor today demonstrated that he understands the difficulties facing home buyers and our industry, and that he is prepared to act to address them in order to break out of the current economic deadlock.
"We have been calling for enhancements to the Scottish government's shared equity scheme for some time and now urgently need an equivalent commitment north of the border to ensure that households right across the UK enjoy similar support and Scotland is not disadvantaged in relation to attracting investment."
James Pargeter, head of residential projects at Deloitte Real Estate, commented:"The main emphasis is on homeownership being maintained as the key driver of the housing market. The new ‘Help to Buy scheme' is an extensive set of measures to boost demand for home purchases.
"The Mortgage Guarantee scheme' is a welcome boost to both the housebuilding industry and developing affordable housing providers as, by stimulating an increased level of demand certainty, it should allow housing supply to rise. Existing schemes with planning consent, but which lack current financial support, should have a better chance of being able to commence and to be built at a quicker rate as a result."
Jonathan Hopper, managing director at Garrington, said:"Another day, another scheme intended to fire up the property market. While the devil of the mortgage guarantee scheme is clearly in the detail, and the implementation, if it works it could see lenders become far more active at higher LTVs.
Steve Hicks, chief executive of Genie, commented: "The Chancellor's ‘Help to Buy' scheme is on the right path to helping people in to homeownership. Innovation has been desperately needed in the housing market over the past few years and so I welcome the Chancellor's proposals to stimulate the housing market.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), commented: "Today's mortgage guarantee announcement should provide the extra boost that's needed to accelerate lending for house purchases up the loan to value scale. It will relieve a real headache for anyone struggling to fund a deposit for a home, and should help to boost confidence in the market at a time when house prices are beginning to rise."
John East, Land & New Homes director at Kinleigh Folkard & Hayward, said:"George Osborne's announcement of the Help to Buy scheme today is positive news for buyers. Key to these new schemes is that they are available to all buyers - not just first time buyers and that the mortgage guarantee will be available to both new build and existing homes. We've recently seen a great deal more confidence in the market with the result being that housebuilders are building more homes. The problem therefore has largely been the deposits that are required and which in London can often take a few years to save.
"The first buy scheme only applied to first time buyers and so in London meant that purchasers were often limited to flats due to the pricing of properties in the Capital. This limit of £600,000 is therefore great news as it will stimulate the house market and enable second steppers and those who are not first time buyers to benefit from this purchase scheme too.
"We therefore expect to see greater levels of activity in the market, especially London, as a result."
John Cridland, CBI Director-General, said: "The Chancellor has heeded our call to stimulate the housing market, by providing support to trapped ‘second steppers', through an extension of the Mortgage Guarantee Scheme.
"The Help to Buy Mortgage Guarantee Scheme is a bold step, which will increase momentum in the housing market and support new high loan-to-value mortgage lending.
"The new £3.5bn equity loan scheme and the additional investment in affordable housing will increase the supply of new homes."
Caroline Kenny, UKALA Executive, commented:"With government figures showing that the private-rented sector now accounts for over 3.8million households and the number of new homes being built still falling far below what is needed, the demand for rented accommodation is only going to grow in the years to come. With this in mind, it is not surprising that more and more investors are looking to buy-to-let. Whilst the new Help to Buy initiative will go some way towards stimulating house building towards meeting demand, prospective landlords should be aware they have an important part to play in providing good-quality accommodation suited to the changing needs and expectations of tenants."
Bob Cherry, partner at CKD Galbraith, said:"Today's ‘help to buy' equity loan and mortgage guarantee scheme is a great boost for the Scottish property market allowing existing home-owners as well as first-time buyers to progress in the property market or get their first foot on the ladder."
Robert Orr, sales & marketing manager at Westleigh Developments, said: "The Help to Buy scheme is brilliant news for those wanting to move on and up the property ladder. We have seen locally that many potential buyers have been discouraged from buying due to only having a small amount in savings, but with this new scheme we hope it will encourage new interest and we can't wait to play our part. We urge mortgage lenders to keep rates competitive and be flexible when it comes to those looking to borrow."
Paul Smith, CEO, Spicerhaart, commented:"It was good to see in this year's Budget that the Chancellor George Osborne has been listening to the concerns of house buyers and through the Help to Buy Scheme is offering some much needed financial support.
"In a clear homage to Margaret Thatcher's Right to Buy scheme of the 1980s, the Government will provide billions of pounds in guarantees to support anyone struggling to either get on the property ladder, or move up the property ladder for that matter.
"The fact that such a scheme is not limited to just new builds for first time buyers but buyers as whole has to be warmly welcomed as this opens up the scope of the scheme to so many more people than previous initiatives, and with it, the potential to build on the green shoots of recovery that we've been seeing in the UK housing market in recent months."
Trevor Abrahmsohn of Glentree International commented:"The extension of the shared equity loan facility, mortgage guarantee and First to Buy arrangements are always welcome to the housing sector and will help not only first time buyers but buyers generally. It will release money upwards into the housing sector and this is a good thing.
"The problem with these schemes is they are, by their very nature, limited in scope and therefore they don't, in themselves, solve the problems that some of the less fortunate buyers have.
Mark Jenkinson, head of New Homes at Bidwells, said:"This is possibly the most important announcement for the new homes market ever!
"The scheme is for all, not just first time buyers, and has a cap of properties valued to £600,000 - that covers the vast majority of new homes built of any shape or size, in any location across the UK."