Rebuilding Y
ou have to hand it to the ministers of the coalition government, they are good at launching schemes. This latest,
NewBuy, follows FirstBuy and HomeBuy, neither of which, sadly, reinvigorated the housing market and didn’t really help as many people as one might have hoped. With this collection of ineffective
initiatives it is tempting to conjure up more ideas for schemes; Can’tBuy, for most people under 40, OldBuy, to help those reaching retirement, or even MegaBuy for bankers and politicians on high salaries. However, for the housing industry, it is no laughing matter. All these schemes were well intentioned,
but they do not assist the vast majority of people who want to sell a house and buy another, they only help first time buyers, lenders and housebuilders. The assisted new build purchase may be marvellous, but it is a bit of a one way street, with the construction industry doing relatively well, expecting a 4 per cent growth this year. Persimmon shares rose 6p to 676.75p, Bellway’s rose 23p to 849.75p, Taylor Wimpey’s by 12p to 58p and Barratt shares increased by 6p to 147.75p. Lucky them! Meanwhile, homeowners with smaller
homes are trapped because they can’t sell to the younger generation as they cannot
16 APRIL 2012 PROPERTYdrum
Britain – or another quick bodge job?
The builders are thrilled but the NewBuy scheme has received a lukewarm reaction from the property industry.
get mortgages without large deposits (and other reasons); while those with larger homes wanting to downsize can’t sell because those owning smaller homes can’t sell or get new mortgages. Looking back to the beginning of the
recession, when mortgage availability shrunk to miniscule levels, one of the reasons given for the decrease in Loan to Value levels on offer was that people had over extended themselves, that 100 per cent and 95 per cent mortgages were a very bad thing, because they created negative equity if prices dropped. It would be better for everyone, we were told, if homes were purchased with larger deposits and smaller mortgages. Now, not much seems to have changed
in the lives of would be homebuyers. Money is still tight, unemployment is a worrying spectre for many, the cost of
NewBuy is good news for home- buyers, and potentially
good news for jobs and
the wider economy too.” PAUL SMEE CML
living seems to increase every week, salaries aren’t rising to balance the books. But suddenly the 95 per cent mortgage isn’t such a bad thing after all. The NewBuy scheme offers buyers just
that. Buyers in England (only) may apply for a mortgage of up to 95 per cent to buy a house priced at up to £500,000, with a mortgage indemnity scheme provided by the builders, backed by government money if the builders’ pot becomes exhausted by claims. How is this good practice? The Council of Mortgage Lenders
(CML) has made a good attempt to explain the scheme, publishing a consumer factsheet to “help homebuyers decide whether the NewBuy scheme, recently launched, can be of value to them”. It explains that Barclays, Nationwide
Building Society and NatWest Home Loans Ltd will offer mortgages of up to 95 per cent under the scheme. “NewBuy is designed to enable lenders to
undertake higher loan-to-value lending with less risk for creditworthy borrowers who can afford the repayments but who have not accumulated a large enough deposit to obtain a mortgage under the usual lending terms. Lenders will not be relaxing their affordability criteria, but the scheme will enable those who can afford the repayments to have the choice to buy a
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