Help is at Hand For First Time Buyers

by Mark Johnston

A recent survey, commissioned by an insurer, revealed that 75% of Ministers of Parliament (MPs) feel that people, with stable incomes and can afford repayments should be helped onto the property ladder. This financial assistance should be provided even when those individuals don’t have the 10-20% deposit required. Today, this assistance is here.

Additionally, within the same survey it was revealed that over 83% of MPs feel that their constituents need more support getting into the housing market. In London, it was suggested that this figure is closer to 100% of constituents will need support, a staggering figure. Wednesday 16 March, 15 local authorities have signed up to a scheme called Local Lend A Hand, aimed at helping first time buyers with their deposits to get onto the property ladder.

Banks and building societies are now responding too. The deposit remains the biggest barrier to homeownership and the average deposit has gone up from 10% to 21% in recent years. There are currently there are over 200 mortgage deals that will lend 90% of property value, last year there were less than 150. These LTV deals represent only a fraction of the deals that were available before the Credit Crunch began in 2008.

Five local authorities, including Warrington, Blackpool, Newcastle under Lyme, Northumberland and East Lothian will be piloting this new initiative, which will see first time buyers with only a 5 per cent deposit helped with a top up from their local council.

Lloyds TSB is the first to sign up to the programme. The councils will put 20 per cent of the price in a Lloyds TSB account, the funds will not go to the buyer and the lender will ask for 5 per cent of this deposit.

This is a risky step for the local authorities and only those that are able to afford the monthly repayments will benefit from help through this scheme. The councils do receive a generous interest payment for their loan amount and it’s not surprising that a further 10 councils are waiting to jump on this band wagon. It’s estimated that over 300 first time buyers will be helped in each area and when further councils join, thousands could be helped.

The benefits can be seen all around. With the weak UK economy needing more stability in the housing market, a weak pound trading and high oil prices, this is a good step forward and I commend Sector Treasury Services, part of the Capita Group, for helping first time buyers and the wider economy in this way.

Housing minister, Grant Shapps recently commented “I am delighted to see that those on the front line of building homes and providing mortgages are stepping up their efforts to help aspiring first time buyers get a foot on the ladder”.

What is needed now, after a record breaking number of complaints against nasty estate agents, is further regulation to protect these buyers from rogue estate agents.

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