Budget latest: New help for FTBs

First time buyers have received a helping hand in this year’s budget with the announcement of a £250 million fund to help them raise the deposit for new-build homes.

Up to 20 per cent of the purchase price will be lent by the scheme, which will take the part of an equity stake. Full details are yet to be announced but Chancellor George Osborne said it could help 10,000 home buyers.

Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said: “Any move to help first-time buyers onto the property ladder must be applauded as this is a sector that has been particularly badly affected by the credit crunch and subsequent mortgage drought. However, the Government must see First Buy as one of a number of mechanisms to help the mortgage and housing market because it will have little impact in isolation. George Osborne estimates that this scheme will help approximately 10,000 borrowers, but that would only equate to a five per cent rise in the number of loans to first-time buyers compared with 2010 numbers.”

Not everyone has been so keen on the scheme, however. Stuart Law, chief executive of Assetz, commented: “Tens of thousands of first time buyers need help, and I hope the Government uses the £250million pledged to the new Firstbuy scheme wisely. Rather than just help 10,000 first time buyers raise 25 per cent deposits on average, it would be sensible to help a significant number of first time buyers raise 10 per cent deposits, since 85 per cent and 90 per cent LTV mortgages are available at reasonable rates.”

David Whittaker, managing director of Mortgages For Business, said:

“The pool of buyers that qualify for the government’s First Buy scheme is so small you couldn’t even have a bath in it. If the government thinks this is going to transform the property market they’re mad. The housing crisis will continue and it will be left to the private rental sector to pick up the pieces. Yet there is very little from the Treasury that will be welcomed by landlords and property investors. The removal of red tape in the process of transforming commercial property to residential is a step in the right direction but much more needs to be done to assist those trying to provide a housing safety-net. Lending conditions are easing but are no-where near the level necessary to take the pressure of the rental market. If the government really wants to ease the housing crisis, it should start by solving the immediate problem of getting a roof over people’s heads and that means streamlining and incentivising the process by which landlords and investors can help prop up the market.”