One of the toughest issues young people currently face is buying their first home and being able to make the first step onto the property ladder. No matter how much affordable housing the government may commission, for many, these prices are still too high to enable people to own their first home. However steps are being taken to support this first big leap.
In December 2014, the government announced the launch of the Starter Homes Initiative, whereby first time buyers could register their interest for purchasing their first home. All you need to do to qualify is be under 40 years old and have never owned a home before. As a result, by signing up to the scheme, you are able to purchase certain new build properties with a discount of 20%. This is a huge saving for those who are yet to enter the property market.
The scheme has stated that there will be price caps on the properties that fall within it. If located in London, the property cannot be sold for more than £450,000 but outside of London this is limited to £250,000. The government has currently said that first time buyers typically spend around £218,000 on their first home, so this scheme will give an average saving of over £43,000. To ensure this saving is then passed on, there is a time limit of five years put on the property before it can be sold again at full market value. If sold within this period, then it must be offered at the reduced rate.
When originally launched at the end of last year, it was said there would be around 100,000 new build properties included within this scheme but a recent announcement has increased this 200,000 by 2020. David Cameron’s comment with this announcement was “My message is clear: we are on your side and we will help you fulfil your dream of buying your first home”.
The benefits to the buyer are clear, but what about the developers? Many would argue that being forced to sell properties at a 20% discount would come as a huge loss to the profits of a company. Well to make this attractive for those who actually offer up these properties, the government are allowing builders to develop under-used or unviable brownfield land and free them from certain planning costs and levies. This includes relief from s106 agreements which developers currently face bills of around £15,000 per property alone. Developers will also find relief from Community Infrastructure Levy charges as well.
Already there has been huge support for this project from big name developers such as Avant, Barratt, Taylor Wimpey and Bellway to name but a few. There has also been interest from smaller builders including Affleck Property Services, Badger Building (E Anglia), Border Craft Homes and Carr & Carr (Builders), and the government is encouraging many more to sign up.
Making that first leap onto the property ladder is renowned for being difficult but could this scheme be the way forward? It may only be early days but the presumed benefits for buyers and developers are clear. Some may see it as being one small step for the developer, but one giant leap for the first time buyer.
If you’re a first time buyer or are thinking about getting on the property ladder soon, our conveyancing experts are here to help. Please contact our team on 01206 835300 or [email protected] to see how we can help.