Existing home-owners and first time house buyers are being offered incentives to finally get themselves onto the property ladder with the launch of the government’s mortgage indemnity scheme. Construction companies and the taxpayer are to be co-guarantors for new properties purchased.
The government expects that the NewBuy scheme, which is being supported by Nationwide, Barclays and NatWest will provide much needed help for prospective housebuyers as they are able to borrow as much as 95% of the price of new properties. it is also hoped that the scheme will provide a boost to the construction industry.
Under the new scheme the house builder will pay 3.5% of the purchase cost into an account held by the mortgage lender for 7 years, additional guarantees of 5.5% are to be provided by taxpayers, however those funds are to be required only in the eventuality of a significant property crash.
The NewBuy scheme introduction coincides with the Prime Minister announcing the extension of the right-to-buy discount for tenants in social housing. Within this scheme, individuals who have lived for 5 years in a council house will be eligible for a 35% discount, and an extra 1% for every additional year up to a maximum of £75,000. Renters in flats can get 50% discount after 5 years, along with 2% extra for every year. According to the government the funds raised through the sales are going to be used towards providing new, affordable housing.