Mortgage experts suggest the £250m shared-equity scheme to help first-time buyers raise a deposit will have a limited impact in boosting the housing market.
Chancellor George Osborne said the scheme would help up to 10,000 first-time buyers raise a deposit for a newbuild property. Borrowers have to raise 5 per cent deposit and the Government and homebuilders will offer up to 20 per cent of the mortgage between them as a low-interest loan.
Your Mortgage Decision director Dominik Lipnicki says the Government has missed an opportunity to fix the housing market. He says: “It is putting a small plaster on a big wound. It will help a few thousand people but will not make any material changes to the housing market.”
First Action Finance head of communications Jonathan Cornell says: “My concerns are it does not help the first-time sellers. Those people cannot really move up the ladder. It is all very well for the Government to launch schemes but, unless lenders accept them, it is not going to work. Similarly, lenders, as a rule of thumb, are more cautious about newbuild property.”
MAC Consulting chief executive Mark Chilton is concerned that homebuilders could inflate prices. He says: “If you are a developer, all you have to do is add 10 per cent to the value and mark it off as a qualifying FirstBuy property. My suggestion is that they must be subject to independent valuation for it to work.”