By Daniel Hunter
Communities Secretary Eric Pickles has welcomed a new multi-billion pound housing package that will help aspiring homebuyers move up the housing ladder and build thousands of new homes.
As part of the Budget, the Chancellor revealed £3.5 billion of funding to help homebuyers secure affordable mortgages and new measures that will enable more social tenants to purchase their home through Right to Buy.
The Chancellor also pledged over £1 billion of extra funding to build thousands of new homes for affordable and private rent.
“The multi-billion pound package for housing recognises its vital importance to the economy. But this support is not just an economic calculation — it’s about values," Communities Secretary Eric Pickles said.
“These measures mean whoever you are — whether a prospective first time buyer, an existing homeowner or a social tenant — if you work hard and want to take responsibility for your future, we will support your aspiration to move up the property ladder.
“At the same time our funding for thousands of new affordable and private rented homes will get spades in the ground, workers on site, and deliver a vital boost to the British economy.”
Housing Minister Mark Prisk said: “The Budget places housing front and centre in the Government’s plans for economic growth, with measures aimed at getting Britain building, helping aspiring homeowners, and supporting our growing market for privately rented homes.
“The clear message from today’s multi-billion pound package of measures is clear: that wherever you are in the housing market, whether renting council housing or privately, whether a first-time buyer or looking to move up the property ladder, there is help available for you.”
At the heart of today’s package is the new £3.5 billion Help to Buy: Equity Loan scheme, which by 2016 will help up to 74,000 homebuyers take their next step on the housing ladder with just a 5% deposit.
It will expand and replace the highly successful FirstBuy model, which is currently aimed at first time buyers purchasing new build properties.
Under the new scheme existing homeowners will also be eligible to receive a 20% equity loan that will help them buy a new build property, with prospective buyers receiving support to purchase properties from a participating housebuilder with a value of up to a £600,000.
By extending support to existing homeowners, the scheme will remove a bottleneck in the market where people want to move, but may be struggling to raise a large enough deposit to purchase their next property.
At the same time a separate option, called Help to Buy: Mortgage Guarantee, will enable lenders to use Government-backed guarantees to offer £130 billion worth of mortgages with smaller deposits, as little as 5%, on new and existing properties.
Where properties are bought under this option, the Government will provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.
Help to Buy will build on the popularity and success of the FirstBuy and NewBuy schemes, which housebuilders have praised for driving sales and boosting the supply of new homes.
Aspiring homeowners have already been voting with their feet: by September 2012 nearly 11,000 reservations and 7,000 sales had been completed through FirstBuy, and the latest figures show 3,700 reservations have been made through NewBuy, the successful industry-led scheme that will continue to work alongside Help to Buy.
Right to Buy
Ministers are determined to ensure that aspiring social tenants also have the opportunity to purchase their home through Right to Buy, and will take further steps to remove barriers so that more tenants can get a foothold on the property ladder.
After years of restricted discounts and dwindling sales, the Government reinvigorated the Right to Buy last April, by radically increasing the potential discounts to £75,000 — almost quadruple the previous discount in some areas.
The Government intends to further boost the scheme by:
- raising the discount cap to £100,000 in London, from Monday 25 March, to recognise higher prices;
- lowering the eligibility criteria, so that tenants can apply to buy their homes after 3 instead of 5 years; and
- looking at ways to simplify the application process for tenants.
Since the higher discounts were introduced in April, 3,500 council-owned properties have been sold to tenants — a third more than in the whole of the previous year, and the highest number of sales since 2007.
The new measures will build on the surge in the numbers of homeowners taking up the Right to Buy, and open the door to home ownership for thousands more social tenants.
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