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Government Schemes: A Boost for the Property Market?

Mon 13 May 2013

George Osborne's budget contained two significant initiatives for the housing market – the 'Help to Buy Scheme' which will provide buyers with only a 5% deposit with a top-up loan of 20% (only available on new homes) and the 'Mortgage Guarantee Scheme' where the Government will guarantee the first 15% of the loan for borrowers. The latter scheme, due to be rolled out in January 2014, is aimed at first-time buyers and will be available on new and second-hand homes. Of the two, the Mortgage Guarantee Scheme is the most significant and has potential to hugely boost the property market. First-time buyers have been pretty much an endangered species for the last 4 years as lenders have been running scared of providing high loan to value mortgages due the perceived high risks and default and the Government imposed requirements to set more capital aside for these borrowers.

We certainly welcome both these initiatives and that the Government recognises that the housing market is a key driver of economic activity in many sectors including construction, retail, removal companies and local trades. Sales activity is still only around 60% of peak levels and the principle issue preventing the market from returning to normal levels of activity is the lack of finance. We look forward to seeing the full detail of the scheme as these are made available so please watch this space.