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John French, Sales Director from Mortgage Advice Bureau at Farrell Heyworth Estate Agents comments on the government’s latest announcement.


The government appears to have a case of “new year, new me” syndrome this month after it announced that it is to fast-track the building of thousands of new homes on publicly-owned land.

This Thatcher-esque approach (a throwback to the urban development corporations [UDCs] that were set up to rejuvenate housing in the London Docklands and Merseyside areas in the 80s) has been deemed “radical” by the government, specifically David Cameron.

Radical? Possibly. Needed? Most certainly. 

They’ve stated that builders will begin working on the 13,000 homes in Dover, Cambridgeshire, Chichester and North West London this year, with 40% of them being ‘starter homes’.

The £1.2bn Starter Homes scheme has been spoken about since this time last year, with the government setting its own target of building 200,000 of them by 2020, and has been designed to help combat the severe lack of properties that continues to drive prices up, thus helping first-time buyers get onto the property ladder.

Cameron stated that the package signals a “huge shift in government policy” and that the government actively getting homes built in this manner has not been seen in three decades. 

That may be the case, but there is no reason for Cameron and the rest of the government to pat themselves on the back just yet. 

Why not? 

According to the Office for National Statistics (ONS), the average price a first-time buyer will pay for a property is £202,765; with the Starter Homes discount, this would be reduced to £162,212.

With many lenders are offering 95% mortgages outside of Help to Buy to increase competition, when Help to Buy ends in 2020, there is a chance that lenders may also retract their 95% mortgages.

This could mean that a Starter Homes property worth the average £162,212 would require a first-time buyer deposit of £40,553 – a substantial amount. 

Of course, in the meantime, it is expected, though still not confirmed, that Help to Buy mortgages will be able to be taken out on Starter Homes properties which would bring that deposit right down to £8,110.

The big question that this raises, then, is does the government have a plan in action for when Help to Buy ends? Without one, they could risk pushing the first-time buyer market back into decline.


For further information call into your local Farrell Heyworth office, freephone 0800 389 1666 or visit www.farrellheyworth.co.uk. 


Your property 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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