/ Home & Energy, Money

First-time buyers thrown a lifeline – is it enough?

First-time buyers are getting much-needed help from the government, and that’s good news to thousands who have been struggling to get their foot on the housing ladder. Are you one of them?

Even though I’ve just gone through the hellish experience of finding a new place to rent in London (it drove me to so much despair that I often resembled Edvard Munch’s The Scream), I’m packing up again.

For, joy of joys, the government is rescuing me from my tenancy hell and is going to help me find a house to buy.

David and Nick have become my very own Kirstie and Phil.

Helping first-time buyers

Of course, I’m being a bit facetious. I am genuinely enthused by the government’s latest attempt to help first-time buyers.

I’ve been stuck like a dog chasing its tail for the past couple of years, battling rising rental costs and trying to scrape together a deposit for my own home. Every time I think I’m nearing the amount needed to get a mortgage, I seem to get priced out again.

The government’s new scheme aims to change all of that. It will underwrite mortgages on new build homes, enabling first-time buyers with only a 5% deposit to own a house. It’s taking big steps to get builders constructing new homes too.

The buy-to-let problem

Nick Clegg has said the plans will ‘unstick’ the mortgage market. And it certainly has become stuck – the number of first-time buyers has fallen to its lowest level for three years.

According to the latest stats from the National Association of Estate Agents, just 16% of all new house sales in October went to first-time buyers – a drop of 6% on the previous month.

The real problem comes when buy-to-let investors, who usually have a decent flow of capital and an easier means of borrowing, snap up one- and two-bedroom houses. These are the very homes that first-time buyers can afford to buy.

In London in particular, most new builds are quickly bought up by landlords, who subsequently charge higher rent and leave people like me in that dog/tail conundrum.

The government has stated that landlords will not be allowed to participate in the new scheme and I want to see that strictly enforced – it really should be for those who want to buy a home and live in it themselves.

Buy-to-let investors have had their pick of the crop over the last few years – it’s time to let us aspiring homeowners climb the ladder.

Comments
Admin

I think this kind of scheme is well-needed right now to try and give the whole property ladder a helping hand. The problem is, there are no first-time buyers at the moment, so many people who would now be moving on are stuck in their first homes. Friends of mine are just about to have their first baby and have had to rent out their one-bed flat while they try to sell it and move into a bigger place, but there just aren’t many buyers around for their property.

I was also interested to read about how many young homeeowners are being priced out of moving onwards because their homes have depreciated in value. Will Nick’s new scheme help get things moving? I hope so…

Admin
Bechet says:
2 December 2011

This encourages fragile purchases which could unravel when interest rates return to more normal levels and house prices plateau or slide. With minimal deposits the lucky buyers could soon find themselves in negative equity. Since the banks, who will process the mortgage applications, are not bearing the risk (unlike the taxpayer) they will have little incentive to refuse risky applications.

Admin

I hope this is relevant. I just read another set of comments from RIBA, about the fact that many new houses, being built outside of London, are smaller than the minimum sizes set down in buidling regulations. Apparently local councils can give builders permsission to do so. In addition the inspection of new builds while they’re being built, has been taken away from building inspectors and become a self inspect process by the builders. Hence the quality of houses has dropped. BBC Watchdog and C4 Dispatches have shown this.
In fact the RIBA report referred to many new builds as ‘Rabbit Hutches’, is this want the goverment to allow.?
Our son is an architect and he went to work in New Zealand as he was fed up designing such hutches.