There have been 2,291 home purchases completed in its first year under the NewBuy Guarantee scheme in England – seemingly a fraction of what ministers originally hoped.
The figure, released by the Department for Communities and Local Government, is for up until March 31. CLG also reports that taxpayers’ liability by then had reached £23.1m, although none of the money had had to be paid out.
The scheme was launched on March 12, 2012, and is a mortgage guarantee available to purchasers of new homes who have jus a 5% deposit. The Government indemnifies 5.5% of the property’s sale value, while developers in the scheme deposit 3.5% into the fund.
Costs would be incurred only when and if the property had to be possessed by the lender and then sold at a loss.
The scheme does not indemnify purchasers against negative equity.
For the four quarterly periods that the scheme has been running, there have been respectively 253, 376, 908 and 754 homes bought under NewBuy, bringing the total to 2,291. The figures mean NewBuy completions dipped 17% in the first three months of this year compared with the last quarter of last year.
Geographically, the scheme has met with very patchy take-up, petering out in swathes of the North and the West Country. The place with the highest number of NewBuy completions has been Dartford, Kent, where there have been 40 sales.
The scheme is due to close in two years’ time, March 2015, and government ministers had said it could help up to 100,000 borrowers.
Given that well under 3,000 borrowers have so far used the scheme in its first year, that target seems highly unlikely – particularly given the Help to Buy scheme, which builds on NewBuy, and which was launched in this year’s Budget.
Ben Thompson, managing director of Legal & General Mortgage Club, said: “The UK is in dire need of a greater supply of affordable housing to meet ever increasing demand, and NewBuy, along with other Government stimulus measures, has been a laudable step in the right direction in meeting this need.
“While many have pointed out that too much stimulus may cause artificial house price inflation in London and the South-East, the truth is that many areas of the country are still very much in need of schemes like NewBuy to get things back on track and to help many first-time buyers achieve their ambition of home ownership.”
Comments
"There is no economic justification for this."
Harry - show me the 'economic justification' for potatoes having doubled in price in the last year. Or why baked beans now cost almost the same for ONE tin than a four-pack did not too long ago?
While you're on - show me WHERE in the North East new-builds have trebled in price in the last dozen years, please...??
New build homes have increased nearly 3x in price over the last 12 years in the North East.
There is no economic justification for this.
These Government schemes are just bailouts for banks and developers who forced up the price of land and housing to obscene highs in the last boom.
The young are forced into a lifetime of debt servitude by the Government so these reckless greedy concerns can stay solvent.
"the truth is that many areas of the country are still very much in need of schemes like NewBuy to get things back on track and to help many first-time buyers achieve their ambition of home ownership"
Or, the truth is that too many tax-payer funded hairbrained schemes are propping prices up and preventing first-time buyers achieve their dream of home ownership.
No Wayne, that would be far too obvious. They'd never think of that!
Forgive me if this question is naive, but wouldn't lower house prices, requiring lower deposits and smaller mortgages also achieve the same thing as simply pumping more credit into the system?
Surely it would also serve to unblock the whole market, not just the first time buyer problem.