Thoughts about Your First Home Scheme

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Announced yesterday. 2.5% deposit + 20% equity loan, newbuilds and FTBs only.

Doesn’t impact me directly as I’m neither a FTB nor interested in newbuilds but I am interested in the impact on the wider housing market and economy.

My feelings are is a thinly veiled help for developers, not help for FTBs. It will artificially inflate property prices just like the original Help to Buy scheme did and people will be unable to repay their equity loans once they start charging interest just like original Help to Buy.

Does anyone think it’s a good thing?

There is no "thinly veiled" IMO, they are blatantly working for their paymasters, the reason that this won"t work now though is that they are no longer in control of mortgage rates, previously they were working (colluding?) with the other main central banks to keep interest rates, and therefore borrowing costs, low, now it depends on what Iran does or if Ukraine blow up a few refineries or who controls the Red Sea ports, very little UK government can do about those issues that would make people feel comfortable to splash the debt on new-builds IMO.
There are going to be some financially misguided souls drawn into this because they believe that a shoe-box by the roundabout on the edge of town is a life milestone that they just have to reach, but they will be the future "sad faces" in all the whiney media articles when this blows up.

So you only need a really small deposit for a property for which you will be saddled with a loan on top of a loan on-top of management charges and ever-increasing utility bills in the context of increasing interest rates. Anyone would have to be very ignorant or stupid to sign up for this.

No, I think all the government incentives (cant remember the name of the ones in the past) have all been about keeping the market more expensive than it would otherwise be, boosting developers profits and its bad for the tax payer all round

I dont mind a loan which has proper interest on it to be paid back which would give something back to the tax payer (although it would still keep the market artivically high which doesnt benefit society at all), but the itnerest paid on these government loans over time have not been representative of good value for the tax payer, the interest rates should be higher.

And new builds are extremely expensive per size compared to older buildings. They're really bad value for money.

Isn’t it the same as the previous help to buy scheme? And from what I understand of that it was a disaster.

I am in favour of schemes that help people buy property. What I really think is needed at the moment is, and speaking from personal experience, is a scheme to help existing buyers move up the ladder.

I scrimped and saved and worked really hard to be a first time buyer. There are many ways to get on the ladder. However I am stuck in a one-bedroom place because the gap between one-bedroom and more is far too big to navigate. I wish there was a scheme to help me here.

For an average home you are looking at just £7000!

Very similar except you need an even smaller deposit

There need to be schemes that help people buy property. Not schemes that help people buy newbuilds!

I agree moving up the ladder is very tricky. We are only managing it because when we bought our current home they only factored in my income as DH was doing a phd and on a zero hours contract. Fast forward 5 years and he has a full time PAYE job and on paper we look like we have loads more income. Most people don’t get that sort of pay rise.

There shoud be schemes to help people buy property that needs refurbishment, bringing property back to life, not new builds

There also should be schemes to provide retirement/elderly accommodation which are NOT leasehold and a complete rip off so that older people can downsize.

Where are the reasonably priced bungalows?

I’m not sure that this is the answer. I share the concerns already mentioned.

Might be interesting to see what the Scottish and Welsh govts come up with.

Ange has come up with one! Soon if you nip out to the shops they will be taking your house, 6 months, LOL, are they completely fucking nuts?

https://www.independent.co.uk/news/uk/home-news/angela-rayner-government-labour-england-david-lynch-b3057040.html

The SNP will probably give you the deposit if you sign a legal letter to say you will vote for Independence, and wear your Braveheart face paint at the weekend.

Back in the 80’s some LAs would give mortgages, at a good rate, to buy houses in Regeneration areas. Most of the properties were liveable, but banks were wary to lend on them unless you had a large deposit. They were ideal properties for FTBs who could undertake DIY projects. There were safeguards so that no landlords/ developers buy them and a time set before any resale.
Schemes like these should be instigated by the Government to help first time buyers

No, there should not be taxpayer funded "schemes" to offload overpriced property to gullible individuals, the market should be left to run it"s course, hopefully the bond market is going to blow these clowns and all their daft plans out of the water soon, there is no "ladder", it is a debt ladder designed to enrich bankers.

Love this idea and the interest gained by the LA would contribute to the coffers as well.

I think there are some places where you can still do this. There was a programme about a street in Liverpool where you could buy the house for £1 but you had to prove you had at least £40k to do it up or something

The problem with allowing the market to run its course as you say is the amount of ordinary people it would completely ruin

I agree with you OP. It's about selling on new builds not using the housing that already exists and is often better quality and easier to live in.

But the UK government doesn"t have the power to prevent this, you can"t game the bond market forever, even although AB seems to believe that you can, all these schemes do is make more people much more financially vulnerable when the SHTF, you don"t think the Labour government can turn back the tide on a collapsing global property bubble with this sort of nonsense do you? They would be better off making a start on the welfare cuts and maybe buy some time with the markets, maybe manage to suppress mortgage rates for a while so more people can make overpayment plans/cutbacks.

https://www.msn.com/en-us/money/economy/traders-attack-pound-in-biggest-bet-since-brexit/ar-AA2d2woC?ocid=finance-verthp-feeds&cvid=6ab899684e6f4c999ac9e09592b7f68e&ei=51

It will be good for FTBs who could afford to buy anyway, they will get 20% of their mortgage interest free (for a while). For anyone who couldn't afford to buy but can just with this help it may well be a disaster, forcing anyone to buy new builds only is stupid and will distort the market and there are so many nice older houses that people need to sell.

More government incompetence at best - corruption at worst.

The best help for FTB is reduced house prices (and/or increased wages - but those need to be earned through productivity improvements).

Very similar - so a stolen Tory policy from way back (2013?) is one of the key headlines at the Labour party conference.

Those areas are riddled with drug problems, crime and antisocial behaviour - there has been lots of media coverage of that. I can't imagine many people would want to live there if they had a choice.

The type of scheme I described were for individual houses that the BS and banks wouldn’t lend on without a hefty deposit. In the 80s we had several friends to taken advantage of this opportunity in London boroughs in North and West London. We were not able to get such a mortgage or grant for doing up ours because it already had CH!