Only 250 homes purchased through the Newbuy Scheme

Posted: 01/10/2012

The Newbuy Scheme was set up by the Government to help first time buyers onto the property ladder by offering them 90 – 95% mortgages for a newly built home however, only 250 homes were bought through the scheme in the first four months after it’s launch in March.

The Government had hoped it would help 100,000 people move by 2015 but this is looking increasingly unlikely. However, according to the Department for Communities and Local Government the average house sale takes up to six months and the Home Builders Federation have reported 1,500 property reservations have been made through the NewBuy Scheme. The Home Builders Federation also stated that an additional 25,000 new homes will be built as a direct result of the scheme and the amount of mortgage lenders getting involved in the scheme has risen to 6 lenders and the developers numbers have also risen to over 30 compared to just 7 at the beginning of the scheme.

The latest report by the Centre for Economics and Business Research revealed that one in five house purchases by first time buyers made in 2011 would not have gone ahead without help from their parents. When the credit crunch began in 2008, parents lent a total of £4 billion to help their offspring onto the property ladder, either as a gift, loan or sharing the mortgage and this figure has risen to £5.3billion in 2011. If first time buyers parents hadn’t lent money to their children, the percentage of homes that would not have been sold would have rose to 19% from 13%.

The average amount of money lent to first time buyers by their parents varied by age group with people between 18 and 16 typically borrowing £19,000 where as those aged 27 to 39 received £32,000 and older buyers were lent an average of £42,000.

According to a report by Hometrack, house prices have fallen for a third consecutive month as the demand for property has stayed slow since the summer months. In September, the prices of homes dropped in England and Wales with no region reporting a monthly price rise. The average amount of time for a home to find a buyer across the nation is 9.9 weeks however London property took an average of 5.8 weeks to find a buyer and properties in London tended to get 94% of the asking price, 1% more than the national average.

Have you considered purchasing a property through the NewBuy Scheme or have you ever had to lend money from your parents to purchase a house?

Amanda McGovern, Pali Ltd
www.paliltd.com

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(0) Comments property ladder, Government, property, first time buyers, NewBuy

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