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Cameron unveils £400 million plan to help first-time buyers

(Update) David Cameron promises the coalition’s new housing initiative will restart the property market and get the nation building again.

 
Cameron unveils £400 million plan to help first-time buyers

(Update) Prime minister David Cameron today promised Britain that the coalition’s new £400 million housing initiative will 'restart the housing market' and 'get the nation building again'.

As part of plans to kick-start the housing market, the government aims to inject capital into housebuilding projects, help 100,000 first-time buyers get a reasonable mortgage and begin selling council houses again at a discount.

Labour leader Ed Miliband, however, described the measures as ‘too little, too late,’ adding that the Tories are putting back just 10% of last year’s £4 billion cut to housing investment.

Cameron told the CBI annual conference earlier today that the housing market is ‘blocked’. ‘Lenders won’t lend, the builders won’t build and the buyer’s won’t buy,’ he said.

Outlining its plans for a £400 million ‘Housing Building Fund’ in a report today, the government explains the fund will be used to inject money into housing projects that are ready to go but lack funds. The government hopes that the scheme will see 16,000 new homes built and up to 32,000 jobs created.

In a foreword to the proposal David Cameron and Nick Clegg said: ‘One of the most important things each generation can do for the next is to build high quality homes that will stand the test of time. But for decades in Britain we have under-built'.

‘By the time we came to office, house-building rates had reached lows not seen in peace time since the 1920s,’ they said.

The government also plans to offer help to up to 100,000 prospective first-time buyers currently frozen out of the housing market because they can't meet lenders' strict deposit requirements – often around 20% of the total value of the home.

Under a new mortgage-indemnity scheme first-time buyers will be able to borrow up to 95% of their new home’s value, with the government assuming part of the risk.

This means that if the newly built house is then sold for less than the outstanding mortgage the lender will be able to recover its loss.

With many worried about what will happen if the beneficiaries of this scheme default on payments, housing minister Grant Shapps sought to reassure taxpayers on BBC Breakfast that taxpayers will not be exposed to ‘some enormous unreasonable cost’.

However, Tracy Kellett, managing director of buying agents, BDI Home Finders, said: ‘The real number of people enjoying the scheme is likely to be far lower than the headline number. The devil, as ever, is in the detail’.

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12 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Nov 21, 2011 at 12:22

A couple of points;

- £400m is a headline grabbing figure, but really is a drop in the ocean when spread out across the UK.

- I wonder how much of the £400m will be absorbed by management costs/public sector salaries.

- £150m towards empty homes is not enough. The largest landlords of empty homes are the councils and they are empty because it costs the council twice as much as it should to refurb them so they are left to get worse. With the councils up here that sum would probably reinstate about 10 houses.

- Lastly house prices are unaffordable for FTB's because prices were inflated by bank lending during the boom. If you want to sort the market out start by putting base rate up to 2% (which would help savers and also the banks who borrow on the markets at over 2% anyway)

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Michael Brooks

Nov 21, 2011 at 13:51

Would it be too much for ` Dave` to announce a similar scheme to provide jobs for the poor.

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Luichicornish

Nov 21, 2011 at 14:45

Are we going to follow the Spanish trail?

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S-ville

Nov 21, 2011 at 15:16

@ Michael Brooks - Dave isn't worried about the poor. Few, if any, of them vote Tory. Property developers, first time buyers and house builders on the other hand.....

What's the betting that the £400m isn't new money at all, but simply a reallocation of an existing fund.

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Bob Riach

Nov 21, 2011 at 16:28

This Scheme sounds good but could be dangerous for potential borrowers. However when economists are predicting a 10% fall in house prices this year, having the government encouraging first-time buyers to get on to the ladder using a low deposit could be viewed as irresponsible.

Potential first time borrowers would be wise to be sceptical about jumping into this scheme as property prices are still high and they could easily end up in a negative equity situation with a mortgage on a property that is worth less than the mortgage outstanding and preventing them from selling.

Is the government offering this scheme to help First Time Buyers? Or is its main purpose to help out the house building sector, which is suffering If this is not the case why is the scheme only available for new build properties?

It’s alright getting on the property ladder but not if the rung breaks at the top and your stuck there.

I will offer this scheme to my clients when it is available but I will be giving some warnings about negative equity and the over pricing of new build properties

Bob Riach Riach Independent Financial Advisers

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Clive B

Nov 21, 2011 at 17:09

The government should not be using our money to offer a mortgage indemnity scheme, trying to prop up prices the market wouldn't necessarily support.

Have the Conservatives completely lost the plot on how capitalism works ?

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Dislexic Landlord

Nov 21, 2011 at 17:21

a drop in the ocean sounds good but most politicans do

Its meaningless

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Michael Brooks

Nov 21, 2011 at 19:18

S-ville, you are of course right. Dave will be using money saved from the cuts to public and welfare services, and the many millions of us who are supposedly benefit cheats and scroungers who will be weeded out.

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Alan Tonks

Nov 21, 2011 at 19:30

Clive B – I totally agree with your views, Apart from have they lost the plot, is there any politician who knows what the plot is today.

Dislexic Landlord- Didn’t you mean drop them in the ocean sounds good a good idea, because most politicians are meaningless.

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Alan Tonks

Nov 21, 2011 at 19:33

Oh dear I meant-sounds like a good idea,

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Anonymous 2 needed this 'off the record'

Nov 21, 2011 at 21:19

We dont have a housing shortage we have a border control force that cant do its job There would be thousands of spare rooms or houses if we run the country as the cons talk but dont walk.Spend the money on modern investments for the youth of this country

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Rose G

Nov 22, 2011 at 13:13

More like rhetoric than reality!

The problem in the first instance is the cost of housing - getting a bigger deposit is not the only problem.

We have housing policies that have resulted in dream home prices for those who already on the property ladder.

I believe the reason why they are only including new builds on this programme because the standard of new builds leaves much to be desired & there are plenty of new builds which no one wants to buy because firstly, they are too expensive & secondly they are too small! What family wants to spend all their time indoors because of the lack of outside/garden space?

Developers know that their builds are not suitable for most families; most new builds are being sold in the urban areas where any property, even if broom cupboard size, are absolutely necessary, if you are only looking at space to lay your head & work all the hours god gives you to even afford that.

But the problem of over priced housing cannot be solved so let's make enough noise to drown out the voices of people who want to pay a more realistic price for their homes!

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