NewBuy scheme needs early launch - CPBigwood

NewBuy scheme needs early launch - CPBigwood

The Government’s NewBuy Guarantee scheme needs to be implemented quickly if it is to kick-start the housing market, an expert has warned.

Simon Gibbs, director and head of the Stratford-upon-Avon and Henley-in-Arden offices of estate agents and auctioneers CPBigwood, said it was an “excellent initiative”.

“Hopefully this will give first time buyers a bit of a leg-up and help them on to the ladder.

“But equally important is that it gives more confidence to builders and the construction industry generally, filtering through into the wider market. The sooner it is introduced the better,” he said.

And he dismissed suggestions from some pundits that the scheme could prove inflationary, saying the sector badly needed the stimulus.

The NewBuy Guarantee is forecast to help as many as 100,000 people buy a new-build home with a deposit of 5-10 per cent rather than the 20 per cent typically demanded by lenders.

The Government initiative originally aimed at first time buyers has been widened to include home movers.

It has been masterminded by the Home Builders Federation and the Council of Mortgage Lenders, with Barclays, Nationwide Building Society and NatWest Home Loans among the lenders already committed, with others expected to follow on.

Backed by an insurance scheme, developers would contribute 3.5 per cent of the purchase price while the Government guarantees 5.5 per cent. The scheme is available on flats and houses up to a maximum value of £500,000 in England only.

Mr Gibbs said: “First time buyers have been struggling to afford deposits because, unlike in the past, you can't get 95 per cent mortgages any more.

“Hopefully this will prove a big boost to those who have effectively been excluded from the market. At last they will be able to own their own home.”

Under the NewBuy scheme, house builders and the Government have committed to cover a limited amount of any future losses that lenders in the scheme could suffer. This happens if a lender has to repossess a property and sell it for less than the mortgage value.