The government’s NewBuy scheme is aimed at helping people in England who want to buy a flat or house but cannot afford to put down a large enough deposit.
The idea is that the scheme will prompt the sale of an additional 100,000 newly built properties.
This is equivalent to less than two months’ sales in England at their current levels, so on its own it may give a temporary boost to activity but is unlikely to change permanently the depressed state of the market.
Even so, for some buyers who can comfortably afford the monthly mortgage repayments it could be very helpful.
How will it work?
From the buyers’ point of view, they will have to identify a home that is being marketed by a builder as a NewBuy home.
They will then have to approach a lender that is also taking part in the scheme.
So far these lenders include just the Nationwide, Barclays and NatWest, the Halifax and Santander.
It is worth noting that that you will still need to have enough cash to put down at least a 5% deposit.
Both the Council of Mortgage Lenders (CML) and NatWest point out that the asking price being asked by the developer for a newly built property can be higher than if you were buying the equivalent home that had already been lived in.
“Some new-built properties carry an additional premium on the sale price that can reduce as soon as the property is occupied,” the CML and NatWest say.
“This potential reduction in the value of the property is an important factor you should consider when buying a new home with a higher loan-to-value (LTV) loan.”
So, look at the asking price and consider haggling, as many other buyers do these days.
Then, ask yourself if the home is still good value compared with anything else you might be able to buy.
The CML has published a guide to the NewBuy scheme on its website.
As well as the need to identify both a builder and lender who are taking part in the scheme, the CML points out its other main restrictions:
- The scheme applies to homes only in England.
- It will not cover homes for sale for more than £500,000.
- Nor does it apply to shared ownership or shared equity purchases.
- It cannot be used to buy a second home or a buy-to-let property.
- You should be a UK citizen.
PLS Solicitors are experts on the legalities associated with the Newbuy Scheme and have completed 100s of cases which involve the various government assistance schemes. For further information, please contact PLS Solicitors on 0161 941 7449.
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