The UK housing market received the boost it had hoped for in the 2013 Budget. George Osborne revealed that the government will be giving GBP 5.4 billion of financial support to tackle long-term problems in the sector and support those looking get on or move up the property ladder.
One of the most significant measures to be introduced is the Help to Buy scheme, which contains two key elements. Firstly, from April the government will extend FirstBuy to those looking to own a new build home. An equity loan worth up to 20 per cent of the value of the property, repayable once the home is sold, will be provided, with a significantly widened eligibility criteria to ensure as many people as possible can benefit. The maximum house value of the scheme will rise to GBP 600,000 and the income cap will be removed.
The government will also create a mortgage guarantee for lenders offering mortgages to people with a deposit of between five and 20 per cent on homes with a value of up to GBP 600,000. It is hoped this will help to support the Funding for Lending Scheme and encourage an increased availability of mortgages on new or existing properties with small deposits.
What's more, social tenants will be given the opportunity to own their own home through the reduction of the qualifying period for Right to Buy from five years to three years. The maximum discount cap in London will also be increased to GBP 100,000. Furthermore, Mr Osborne pledged to increase investment in new low-cost properties by doubling the affordable homes guarantee programme, ensuring an additional GBP 225 million to support a further 15,000 properties in England by 2015.
Simon Rubinsohn, Royal Institute of Chartered Surveyors chief economist, commented: "The range of measures announced under the 'Help to Buy' scheme to kick start the housing market are much needed. Helping those who can't afford large deposits by using the government's balance sheet to guarantee mortgages and using capital savings to offer shared equity loans on new build for all buyers will help prevent prolonged market stagnation - although it presents a significant risk to government."
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