Meet first homebuyers to complete under Help to Buy scheme

A young couple relocating from Northern Ireland to a new Taylor Wimpey home near Liverpool have become the first new homebuyers to complete under the Help to Buy scheme, an initiative launched by the Government on 1^stApril.

Catherine McClean (26), a nurse, and Nikolai Ivanovic (25), a former Queens Guard, have taken their first step on the property ladder by using Help to Buy to purchase a three bedroom semi-detached home at Taylor Wimpey's Speakman Gardens development in Prescot.

Commenting on the success of the scheme, Housing Minister, Mark Prisk said: 

"I'm delighted that, just five weeks after the launch of Help to Buy in the Budget, the scheme's first buyers are moving into their new property. I'd like to congratulate first time buyers Nikolai and Catherine as they move in today, and wish them all the best for the future in their new Taylor Wimpey home."

Pete Redfern, chief executive of Taylor Wimpey, said:
“The measures announced by the Chancellor will help home builders get Britain building and add a welcome vibrancy to both the new and second hand market over the next three years. The country is desperately in need of more homes and we welcome the Government’s focus on addressing this.”

New home-owner Catherine McClean said of the scheme:
“Help to Buy has been a massive help to us. We certainly wouldn’t be in the position we are now without it. It has enabled us to own our own property. I am the first person in my family to own my own home and I am immensely proud. We have been so lucky to have been given a helping hand to allow us to achieve this.”

4,000 reserve new home in Help to Buy scheme

Around 4000 people have reserved a new home using the Equity Loan part of the Government’s flagship Help to Buy scheme in just two months.

The Equity Loan scheme, launched on April 1, has already seen developers committing to increasing supply, but with the scale of demand for the scheme now becoming apparent, it is clear the industry will be able to significantly increase output. 

The Help to Buy scheme has two parts to it. The Mortgage Guarantee element is due to start next January and is aimed at stimulating the whole housing market. 

In the meantime, the Equity Loan part – under which Government helps the purchasers of new build homes secure a mortgage with at least a 5% deposit by granting an equity loan of up to 20% – has got off to a ‘flying’ start. There are now more than 400 builders across the country registered for the scheme.(More details on both schemes at foot of release.)

Interest has been huge and there are now on average around 500 people a week taking advantage of the scheme. Large deposit requirements have been the biggest barrier to people’s ability to buy, and thus builder’s ability to build.  The Equity Loan scheme – allied to the industry’s NewBuy scheme that has had over 4500 reservations - means people can get onto or up the property ladder with a 5% deposit. And because buyers only require a 75% first-charge mortgage under the Equity Loan scheme, homes are very affordable.

House building levels in England are currently around half (115k p/a) those needed to meet the formation of new households(220k p/a)^1. Just 88k private for sale homes were built last year. Since 2007 output has dipped to levels not seen since the 1920s, with the resultant social and economic implications. But with effective measures now in place to support demand, and consumer interest increasing, the industry is confident supply can be increased.

Stewart Baseley, Executive Chairman at the Home Builders Federation said;

“The Equity Loan part of Help to Buy has got off to a flying start. It has been an unqualified success so far and 4000 reservations in just two months shows both the consumer demand for the scheme and developers’ commitment to it.

“The large deposits required in recent years to secure a mortgage have prevented many from buying – and as a result, builders from building. The Equity Loan scheme helps consumers overcome that deposit barrier and as a result the scheme will undoubtedly lead to an increase in house building - already we are seeing companies revise their projected build levels as a direct result of the scheme. This in turn will create jobs and deliver an economic boost.” 

Stamp duty choking UK housing market

The UK housing market is being choked by stamp duty, say the Homeowners Alliance(HOA) in a special report released today.

Stamp duty as risen by more than seven times the rate of inflation since the mid-1990s, taking the typical bill faced by buyers to almost £6,000, a report by the homeowners' campaigning group has said.

HOA said the government's stated policy of encouraging home ownership was being undermined by the duty, which it claimed has had "a downward impact" on the market.

In a report entitled Stamping on Aspiration, it said that while house prices had risen fivefold between 1995-96 and 2011-12, the amount of tax paid on property purchases had increased 11-fold.

The HOA said the average homebuyer now paid stamp duty of £5,957, or 3.7% of their house purchase price. In London, where house prices have continued to post big rises, the average stamp duty attracted by each transaction was put at £17,529.

While the average stamp duty bill was equal to eight days' earnings in 1995-96, by 2011-12 it would take 11 weeks' work to pay it off.

Stamp duty rates

Until 1997, there was one stamp duty band, with homebuyers paying 1% on all property purchases above £60,000. The new Labour government introduced two new thresholds of £250,000 and £500,000, and since then successive governments have introduced new bands and rates.

Tax is now paid at 1% on homes bought for more than £125,000, at 3% between £250,000 and £500,000 and at up to 7% above that. The £250,000 and £500,000 thresholds have remained unchanged since their introduction, despite a 140% rise in house prices, and the tax rates on them have been increased.

The HOA said freezing those thresholds had led to a "very marked 'fiscal drag' effect", where rising prices automatically pushed houses into the higher brackets. It cited the example of a property bought for £240,000 and later sold for £270,000, moving it from the 1% bracket to the 3% bracket. In this example a 13% increase in the house price results in a 238% increase in stamp duty, from £2,400 to £8,100.

Despite the collapse in stamp duty revenues since the housing market started to falter in 2007, the HOA said the government expected to collect about £7bn in the current tax year and £11.7bn in 2017-18, more than it makes from taxing tobacco.

The HOA wants to see thresholds increased annually in line with house prices, and for the first threshold to be above the average house price. It said buy-to-let investors and second-home buyers should pay more than those buying a home to live in, and the government should consider charging sellers, not buyers.

It also called for first time buyers o be permanently exempted from the tax.