£250m plan to get first-time buyers on to property ladder

First-time buyers struggling to raise a deposit received a budget boost with the announcement of a new scheme to help them get on to the property ladder.

The Government has earmarked £250m from the Bank Levy to help around 10,000 households with incomes of up to £60,000 buy a new-build property.

Under the FirstBuy initiative, buyers must save a deposit worth five per cent of the property’s value, with the Government and housebuilders putting up 10 per cent each through an equity loan, enabling people to qualify for 75 per cent loan-to-value mortgage. The equity loan will be interest-free for the first five years.

The Government hopes the scheme will also provide a boost to the construction industry and support up to 50,000 jobs, after the number of new homes that were built fell to their lowest peacetime level since 1923 last year.

The initiative is almost identical to the Homebuyer Direct scheme that was launched by the previous government in 2009. Around £275m of funding was made available for that project and it has helped 9,000 people to buy their first home.

The Council Of Mortgage Lenders welcomed the announcement, saying it would provide ‘modest help’ for first-time buyers.

A spokeswoman said: “Every little helps, but it is not going to fundamentally change the landscape.”

Claire Jarvis, sales manager for Persimmon Homes North West, said: “We recognise how important first-time buyers are in sustaining the property market and the prediction that FirstBuy is expected to help 10,000 families get on to the property ladder is welcome.”

John Cosgrave, managing director of Warrington-based, Arley Homes, said the policy will be some benefit to the market as a whole but would not impact Arley directly:

“The Government has made a commitment to help get the market moving, which is something we have long been calling for, and I’m glad to see it comes in the form of practical support for first time buyers who are in desperate need of help and are the foundation blocks of the housing market.

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Local councils to offer first-time buyer mortgage support

Fifteen local authorities team up with Lloyds TSB in a scheme to top-up first-time buyers’ deposits

First-time buyers who are unable to call on the bank of mum and dad to boost their deposit may now be able to turn to their local council instead.

Fifteen local authorities, including East Lothian, Blackpool, Newcastle-under-Lyme and Warrington, have agreed to put money in a Lloyds TSB scheme to top up the deposits of first-time buyers trying to buy a home in their area. The scheme, called Local Lend a Hand, allows first-timers to buy a home with a deposit of as little as 5%.

Raising a deposit is one of the biggest hurdles for first-time buyers since the 2007 banking crisis, with many lenders refusing mortgages to those whose savings are less than 20% of the value of the property they want to buy, and offering the lowest rates to those with deposits of 25% or more. The requirement for a big deposit has relaxed recently with more lenders willing to provide mortgages worth 90% of a property’s value, but only two – Yorkshire Bank and Skipton building society, via its estate agency subsidiary Connells – will lend up to 95%.

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Economy needs housebuilding budget boost

Tackling housing crisis would create 200,000 jobs

HBF: Urgent measures to dramatically increase housing supply and address the growing housing crisis must be included in next week’s budget. Providing desperately needed homes would create 200,000 direct jobs over the next year and stimulate growth giving the country a massive economic boost.

A year into office the Government is facing a huge housing dilemma. House building is at an all time low; planning permissions are continuing to decline; the number of first time buyers has collapsed; millions of families are languishing on Local Authority waiting lists; and there is an ongoing hiatus being caused by the Coalition’s radically different planning system that is still being formulated, with Local Authorities struggling to get to grips with the new incentive based proposals.

Housing projectMeanwhile, economic growth is crucial to the wider economy over the next few years. According to Government figures, even in its current crisis state, housing supply accounts for around 3% of UK GDP and provides between 1 and 1.25 million jobs in the UK.

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House prices fall for the eighth consecutive month

Experts predict prices will continue to fall as fewer people are getting loans and many are falling behind repayments

The average price of a UK home fell by 1.4% in January to £208,552 according to the Department for Communities and Local Government (DCLG).

The annual rate of house price inflation dipped to 0.5% in January, compared to 3.8% in December and a peak of 10.6% in May 2010, according to the DCLG house price index. It was the eighth consecutive month during which the annual rate of house price inflation has fallen.

Negative housing market data was also announced by the Financial Services Authority (FSA), which showed new loans to borrowers reached £37bn in the fourth quarter of 2010 – a drop of 10% compared to the previous quarter and an 11% fall compared to the final quarter of 2009.

The FSA said the number of new arrears cases increased in the final three months of last year to 38,800 – 6% higher than the previous quarter but still 5% below the 40,900 cases in the fourth quarter of 2009 . The total number of accounts in arrears at the end of 2010 was 343,400, unchanged from last quarter.

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House prices fall 2.8% year-on-year

Halifax house prices index shows decreases in yearly, quarterly and monthly measures giving an average house price of £162,657

House prices fell by 2.8% over the the year to February, according to the Halifax – the biggest annual fall since October 2009.

The bank reported a monthly change of -0.9% in house prices and a quarterly change – lenders’ preferred measure – of -0.4%, leaving the average house price at £162,657.

But Martin Ellis, housing economist for the Halifax, downplayed the falls saying there had been little change in house prices over the first two months of 2011, with this month’s 0.9% fall offset by January’s 0.8% gain.

“Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,” he said.

“Fewer properties have been coming on to the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.”

The ratio of average house price to national average earnings for a male working on a full-time basis is also at its lowest point for a year, standing at 4.46 compare to 4.63 in February 2010.

Earlier this week, Robert Gardner, chief economist for Nationwide building society, said the low number of first-time buyers was “casting a shadow” over the housing market.

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