Govt promises cash boost for first-time buyers
Tuesday, 8 April 2008 12:00 AM
The government is to offer grants to first-time buyers in order to lift this crucial group onto the housing ladder, housing minister Caroline Flint has announced.
News of the extra cash came as lenders announced a severe correction in house prices, with Halifax today reporting a 2.5 per cent fall in house prices last month.
While speaking to offset panic of a full-blown housing crash Ms Flint today announced first-time buyers will be eligible for assistance grants of up to £1,500 in value, in a bid to maintain momentum at the lower end of the market.
It is thought the cash will help buyers pay solicitors' fees, for furniture, removal costs and other incidental costs when moving to a new property.
The grants will be made available through the government's Open Market HomeBuy scheme, which offers shared ownership deals to key workers and those considered vulnerable by local authorities.
However, according to reports, a mere £3 million will be made available through the new grants scheme - enough to assist just 2,000 first-time buyers.
It is also questionable if such a small amount of cash can be of real benefit to a first-time buyer, when the New Homes Marketing Board (NHMB) finds the group pays an average of £1,750 in stamp duty alone.
The Royal Institution of Chartered Surveyors (Rics) has also criticised the government's general approach to the assistance of first-time buyers.
"Shared ownership schemes are not a 'silver bullet' for affordability issues and will only ever be a small part of a wider package of measures," explained, Rics public policy officer, James Rowlands.
"The low numbers involved in shared ownership schemes mean their impact on the housing market will be severely limited.
Rics argues the government must take action to boost house building levels by ensuring more land becomes available for development, in order to tackle wider issues in the housing market.
It is also argued empty homes should be brought back into use and more family homes be built.
The government has outlined plans to build two million new homes by 2016, with a further one million, carbon neutral, homes set to be completed by 2020.
However, construction levels have continued to slow in recent months.
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