The Government recently visited Linden Homes’ Boxgrove Gardens development in Guildford and used the opportunity to announce a new initiative to help with the current slump in the property market.
The scheme will see the introduction of tax-payer backed 95% mortgages for first time buyers. The idea is clearly to help these buyers get their foot on the ladder which is becoming more and more difficult for them in the economic climate we find ourselves in.
The Government have said that the scheme will help break the current cycle whereby lenders won’t lend, builders can’t build and buyers can’t buy – but can it work?
The plight of first time buyers is such that before they can even think about finding their first dream home they have to be able to have anything of up to 20% of the potential purchase price for deposit purposes and even then still run the risk that this will not be sufficient with the tough lending criteria they have to be meet.
The new scheme would enable first time buyers to have to find only a 5% deposit and obtain a tax-payer backed mortgage for the remaining 95%. It is, however, only to be made available to these buyers when buying a newly built property and it will therefore not in any way boost the flagging property market and the home buyers wishing to move.
The question, therefore, is whether the scheme is workable and will it enhance the condition of the property market? In many ways we can’t see that it will.
Debbie Beswick, Senior Legal Executive, Residential conveyancing
