Alistair Millar, solicitor at Tallents in Southwell advises how purchasers of new build homes could benefit from the NewBuy initiative.
12th March 2012 saw Housing Minister Grant Shapps, launch the ‘NewBuy’ Guarantee scheme, which aims to kick-start a recovery in the UK property market.
In simple terms, the NewBuy scheme is designed to enable both first-time buyers and people already on the housing ladder to buy new build homes or flats with just a 5% deposit. The remaining part of the mortgage will be funded by a 95% loan-to-value mortgage currently available from three high street lenders, with more lenders expected to offer 95% mortgages over the coming weeks.
The NewBuy Guarantee is a mortgage indemnity scheme, which has the backing of three major high street banks, Barclays NatWest and Nationwide. It has been welcomed by house builders, both large and small, across the UK. Under NewBuy, the builder pays 3.5% of the sale price into a special account held by the lending bank for seven years. UK taxpayers will provide additional guarantees of 5.5%, but this money would only be called up on in the event of a major property crash.
The scheme is expected to help up to 100,000 buyers, who would otherwise be unable to buy, or move home, because of their small deposits. Additionally, the scheme is a welcome boost to the construction industry as it is set to support the creation of up to 50,000 new jobs.
The NewBuy scheme is open to any UK citizen and is offered under the following conditions:
– The scheme is limited to the first 100,000 homes
– It is for new build properties, both houses and flats, only
– It is applicable for homes up to the value of £500,000
– The home must be the owner’s main home and cannot be used for investment purposes
Despite the current economic climate, we have still been kept busy by people wanting to sell, or move home, but the NewBuy scheme will help not only existing homeowners purchase a brand new home, but also help first-time buyers get onto the housing ladder. With the added benefit of job creation in the construction industry, this is the kind of kick-start initiative that our housing market and economy need to get back on track.
The NewBuy scheme was launched on the same day as David Cameron confirmed the extension of the ‘right-to-buy’ discount up to £75,000 for social housing tenants.
This re-boot of the right-to-buy scheme will help an estimated two million tenants in the UK to help them buy their existing home. Again, this is a welcome boost for the housing market and will help many people get their foot on the first rung of the housing ladder.
If anyone is thinking of taking advantage of either of these schemes, then we recommend talking to your solicitor as soon as possible to ensure that the house purchase can proceed as smoothly as possible.
Tallents has nearly 240 years of experience in offering home buying and selling advice for the people of Nottinghamshire and Lincolnshire.