Budget 2011: First time buyer scheme aims to open up housing ladder

By The Beresfords Marketing Team - 25 March 2011

The recent budget saw Chancellor George Osborne announce a number of measures aimed at boosting the property sector.

Chief among them was the First Buy Direct scheme which will see first time buyers receive £250million worth of aid from the Government.

This incentive will be open to those with a household income of less than £60,000 a year and who can put down a 5% deposit on a new home. Those who qualify will be eligible for a loan worth up to 20% of the value of the property, jointly funded by the government and house builders. The loan will be interest-free for five years and only be repayable when the house is sold.

Terry Holmes, Director of Beresfords, comments: “It’s a step in the right direction that the government has begun to take positive action to provide more aid to first time buyers through the First Buy scheme.  Access to equity loans could help many people who thought they were locked out of home ownership take their first step onto the housing ladder.”

“However, the Government must see First Buy as one of a number of mechanisms to help the housing market. We would like to see this scheme used hand-in-hand with other initiatives, such as a review of the Stamp Duty threshold. First time buyers already benefit from 0% Stamp Duty on properties up to £250,000 but in this area, only a small proportion of properties fall within this range.”

“What’s more with the average age for first time buyers now is mid 30’s, many will be buying small family properties as opposed to apartments so there’s even less chance of them avoiding Stamp Duty.”

"The whole way Stamp Duty is calculated should be reviewed and regional price differences taken into account to encourage greater activity.”

“We know from our own experience that the biggest barrier to homeownership can often be saving for a deposit, and this scheme is a positive step by the Government. As a result I hope the Government uses the £250million wisely. Rather than just help 10,000 first time buyers raise 25% deposits on average, it would be sensible to help a significant number of first time buyers raise 10% deposits, since 85% and 90% LTV mortgages are available at reasonable rates.”