Government Boost for First Time Buyers

Plans announced this week by housing minister Caroline Flint reveal that the government will soon be offering special grants to help more first time buyers make the move onto the property ladder.

£1,500 grants designed to assist with solicitors fees, new furniture and other costs associated with buying a home will be made available to key workers and other buyers taking advantage of government run shared ownership schemes.

They have been introduced largely as an attempt to breath life back into the lower sector of the property market after the withdrawal of high loan-to-value products priced many potential first time buyers out of the market completely.

The Open Market HomeBuy scheme at the focus of these grants is designed to make property a more affordable aim for key workers such as nurses, teachers and police officers and those who have been deemed ‘vulnerable’ by their local authorities. It offers shared equity loans to assist with up to 50% of a homes purchase value and cuts the cost of buying a home considerably. These new grants will only add to the assistance that these schemes can bring to those who are unable to buy on the open market.

However, this latest improvement to the scheme has come under much criticism from the opposition who stress that it simply isn’t enough to boost the bottom of a struggling market.

They argue that the £3million set aside to fund the grant system falls far short of its requirements, with the announced £1,500 amount not even covering the average cost of stamp duty which, according to the New Homes Marketing Board, currently sits at £1,750.

Instead, they suggest that raising the minimum stamp duty band to £250,000 would have a more marked effect on property affordability for first time buyers.

The grants announced by the housing minister are just part of a larger scheme to improve the affordability of housing in the UK, with plans to build a further 30,000 homes (many of which will be ‘affordable’) on unused Brownfield sites also revealed.

In addition, a government based group headed by Ms Flint will also be liaising with the Council of Mortgage Lenders to formulate a realistic strategy to help struggling homeowners.