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By now, it is no secret what the problem surrounding the current housing market is – the lack of a housing supply.
As a result, the hardship that first-time buyers are facing in getting onto the property ladder is becoming increasingly recognised. John French, Sales Director from Mortgage Advice Bureau at Farrell Heyworth Estate Agents discusses.
Since 1990, there have only ever been four years where the number of new homes built has been over 200,000, so David Cameron’s reassurance to his delegates at the Conservative Party Conference that they will be focusing on helping first-time buyers attain affordable new homes should come as positive news.
Up until now, builders have been “forced” to offer affordable rented homes in new developments but this is to change to the offering of what have been dubbed as “Starter Homes” – discounted new homes specifically for first-time buyers under the age of 40.
What are Starter Homes?
Starter Homes are new properties that will be built on designated development areas such as under-used commercial land or vacant sites and will be available at a 20% discount to first-time buyers. According to plans, the scheme will apply to homes worth up to £250,000 outside of the capital, or £450,000 within London.
What’s the catch?
Other than having to be under the age of 40, prospective buyers cannot have previously owned their own homes. After purchasing the property, you will not be able to sell or rent it out for their full market value for the following five years.
Where has the scheme come from?
Speaking to his delegates, Cameron claimed that, “When a generation of hard-working men and women in their 20s and 30s are waking up each morning in their childhood bedrooms - that should be a wake-up call for us.”
There is expected to be 200,000 new homes to be built under the scheme by 2020 and, as of yet, the properties will be in England only, with the exact location of the homes being dependent upon where the suitable land becomes available.
How do I find out when Starter Homes become available in my area?
Whilst the properties will be marketed in the usual way, registering your interest on the scheme website, starter-home.co.uk, will allow you to keep up-to-date as new homes become available in your area.
Is the scheme enough to bring us out of the house-building “slump”?
Simply put, no.
Schemes like Help to Buy continue to exist, and demand will continue to increase amongst first-time buyers. As we wait for new homes to be built as a result, house prices will continue to grow, effectively freezing out first-time buyers from the market.
Saying this, the government’s relaxation of the planning regulations is certainly a move in the right direction, though it is clear to see that there is still more that needs to be done to help first-time buyers actually get onto the housing ladder.
After all, everyone’s circumstances are different. Who is the one who decides what is “affordable” and what is not?
The Starter Home initiative doesn't have a formal end date as such, but as it involved a change to national planning policy, it can be reversed or amended by the government at any time, which is why it is important that you seek advice from a professional mortgage adviser when considering your next move.
For further information call into your local Farrell Heyworth office, freephone 0800 389 1666 or visit www.mortgageadvicebureau.com/farrellheyworth .
Your home may be repossessed if you do not keep up repayments on your mortgage.
There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1.5%, but a typical fee is 0.3% of the amount borrowed.
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