News: Budget 2013: Gov sees housing market growth key to recovery

Fri, 22 Mar 13

Chancellor George Osborne has put the property market at the heart of the Government's plans for economic growth.

In this week's Budget he unveiled two schemes aimed at getting the sector moving positively once more.

The Help to Buy scheme will allow all purchasers to put down a 5% deposit on a newly-built home from April.

A maximum of 20% of the cost of the home will be funded by a shared equity loan, financed by the Government. This will be interest-free for the first five years.

The second measure is the new Government mortgage guarantee scheme which will run for three years from the start of 2014.

It will be used to support £130billion of mortgages for old and new homes.

Ian Fletcher, director of policy at the British Property Federation, said: "This is a strong package of help for housing. Annual transactions are half what they were and that has a knock on consequences for all those parts of the economy that rely on people moving. Helping people needing a deposit has for some time been cited as the missing piece of a coherent housing policy and is therefore welcome."

Stephen Noakes, Mortgage Director at Lloyds Banking Group, said: "We are very supportive of innovation in the housing market and believe that the mortgage guarantee scheme, will give a much needed boost to the housing market and most importantly address the issue of accessibility.

"Since the launch of the Government's Funding for Lending scheme we have seen mortgage rates hit an all-time low, really making a difference to affordability. These proposals will, just as importantly, address accessibility, and provide a genuine solution to the challenge of raising a deposit. Working together these two schemes will get more people on and moving up the property ladder.

"Crucially, this scheme will not only help first-time buyers but also second steppers, a key segment of the housing market that is also in need of more support and attention. Our recent report from Lloyds TSB indicates that little has improved in the past year for those first-time sellers looking to take the second step on the housing ladder, almost two-thirds of second steppers had wanted to move up the ladder in 2012 but were unable to. Raising a deposit has been cited as one of the key challenges. While the property market is likely to continue to be challenging, the fresh support announced [today] will have a real knock on effect across the whole of the housing market and we expect it could help around 50,000 people a year."

Nick Kennett, Director of Financial Services at Post Office said: "[The] Budget gives potential home-buyers reasons to cheer, whether buying their first home or looking to move. The Chancellor's ‘Help to Buy' scheme is just what is needed to get the country moving."

See also: Home Asking Price Index

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