Latest Public Sector News

12.03.12

NewBuy scheme to help home buyers

The Government is launching a new mortgage indemnity scheme to help buyers climb up the property ladder. NewBuy involves the construction industry and taxpayers acting as co-guarantors on new homes bought by existing or first-time buyers, enabling people to borrow up to 95% of the value of new homes.

Under NewBuy, the builder pays 3.5% of the sale price into a special account held by the lending bank for seven years. Taxpayers will provide additional guarantees of 5.5% but that money will be called upon only in the event of a major property crash.

The scheme is available for properties of up to £500,000 inEnglandonly. The construction industry hopes the plan will lead to an extra 100,000 properties being built, which it says would create 500,000 jobs.

Prime Minister David Cameron said: “Strong families and stable communities are built from good homes. That’s why I want us to build more homes and I want more people to have the chance to own their own home.

“We’re rebooting the right-to-buy scheme to increase discounts for two million tenants in social housing inEngland. And we’re delivering on our promise to offer affordable mortgages to buyers who might otherwise not be able to raise the money to buy a newly built home. It’s no good hoping people will climb the property ladder if the bottom rung is missing.”

The Home Builder’s Federation is backing the scheme and its executive chairman Stewart Baseley said: “NewBuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first-time buyers and those unable to take the next step on the ladder.

“The scheme will also provide a vital kick-start for house builders large and small who will be able to build the homes and create the jobs that the country desperately needs.” 

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