From April 1, the existing program of assistance for the purchase of equity loans is replaced by a new program which is reserved for first-time buyers only and introduces regional price limits.
Jonathan Kidoushim, Partner at Cavendish Legal Group examines what the changes mean for the UK property market
It is well known that the past 12 months have been a roller coaster ride for the real estate market. The coronavirus epidemic effectively shut it down, before the Chancellor then supercharged it with the introduction of the SDLT party which certainly grabbed the headlines; and rightly so, given the dramatic effect it has had on the market and the transport sector in particular.
The SDLT holidays were not the only major policy change in the real estate industry, as the new version of Buyer’s Aid, intended only for first-time buyers, will go live on April 1. Although intended as a boost, it can actually put the brakes on home buying in some cases.
Since the launch of Purchase Assistance in 2013, the program has enabled first-time buyers and homeowners to use the government-backed Purchase Assistance loan for the purchase of new homes. The launch of the new program means that only first-time buyers will be able to apply for the loan, which is to be used to buy a new home, and regional caps will be put in place.
Of course, anything that helps first-time buyers, especially in this climate, should be seen as a good thing. To this end, the program is ideal for a first-time buyer who purchases new construction directly from a developer. movers using the original Purchase Assistance program. Now they have been left out which can actually create a stutter in the market as current owners who are potential buyers may not be able to step up to the next level.
The goal of the program is to help people with small deposits get up the ladder, but the way it works from April 1 could prevent people who currently own a property from expanding into a new property. bigger. They may struggle to acquire the required deposit without the government boost, but would not qualify as they would not be first-time buyers. Inevitably, this will result in fewer completions just because fewer people are eligible. That said, it may not be as dramatic as it was feared, because what we are seeing now is that more and more lenders are starting to increase loan-to-value (LTV) rates with 90%. % and 95% of mortgages that come back to the market.
Additionally, in his recent budget, the Chancellor announced more details on the new government-backed 5% mortgage. Under this program, first-time buyers, movers and former homeowners with a 5% down payment will have access to 95% LTV mortgages. Aside from the larger question of who will be responsible for any default, for example the taxpayer, he may take back homebuyers with lower deposits who are no longer eligible for Home Assistance. purchase.
The government is committed to ensuring that the housing market remains in good shape, being a key driver of the economy at large. For those first (or even second) time buyers struggling to find the funds for the deposit, the outlook is improving with the new HTB program and government guaranteed loans.
Ultimately, what these changes really underscore is the importance of getting the right advice early on in the property buying process and working with expert brokers and transportation agents in the process. domain, whether you are a first-time home buyer or a home buyer. to enlarge.