BORIS Johnson has vowed to get millions of Brits on the property ladder with a new low deposit mortgage scheme for young people.
The initiative would buyers able to purchase property with just a 5% deposit, with the government taking on some of the loan risk in the form of a state guarantee.
He revealed the plans to the Conservatives at the virtual party conference today, where he also suggested that social distancing would be over within a year.
Before the pandemic, first-time buyers could buy a home with a 5% deposit but almost all of these have since been withdrawn.
Now, deposits tend to be roughly 15 to 20% of the price of a property.
But first-time buyers have also been locked out of the property market due to strict affordability checks, even though they could afford the repayments.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa – It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.
Help to Buy equity loan – The Government will lend you up to 20% of the home's value – or 40% in London – after you've put down a 5% deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25% on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25% to 75% of the property but you're restricted to specific ones.
"First dibs" in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20% discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
Currently, the amount buyers can borrow is limited to typically around 4.5times their annual salary.
The government believes the scheme, which will remove the "stress tests" carried out by banks, will help two million Brits own their own homes.
Mr Johnson said: "We will help turn generation rent into generation buy.
"We will fix the long term problems of this generation not by expanding the state but by giving power back to people.
"The life affirming power of home ownership. The power to decide the colour to paint your own front door."
The proposal would be a successor to Margaret Thatcher’s Right to Buy policy which has seen millions of homes sold since its introduction in 1980.
More to follow…
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