The government has announced a new scheme to facilitate first time buyers onto the property market, thus promoting lenders to lend, builders to build and buyers to buy.
The scheme effectively allows first time buyers of new build homes to put down a 5% deposit with the government and house builders acting as a guarantors, with each putting in 10% to be treated as an equity loan; buyers would therefore be taking out a 75%
The scheme has been developed to assist first time buyers onto the property market without an unattainable deposit, and also provide some protection, as the equity loan is interest free for the first five years. It is anticipated that upon the sale of the
property, the owners will have to pay back 20% of the value of their homes in order to repay the equity loan.
The scheme will also include a £400million ‘Get Britain Building’ fund made available by the government to provide financing for housing projects in order to overcome the ‘lack of confidence’ in the market, and restart building projects which have been abandoned
due to lack of finance.
It is anticipated more than 100 builders and local authorities are willing to take part in the scheme. Buyers must however take into consideration that in the recession, the value of new-build homes have fared badly when compared with older builds, and first-time
buyers could be exposing themselves to the pitfalls of negative equity, should the housing market continue to face a downturn.
To discuss how we can provide further advice in connection with these issues, please contact Ian Barker, Partner and Head of our Real Estate team, by email to email@example.com or alternatively you can call Ian on 0161 833 9211.
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Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of the contents of this article.