Updated George Osborne's flagship scheme to boost the housing market may not help first-time buyers and could cost the Treasury large sums, MPs warned today.
The government will guarantee mortgages for three years from January where applicants can put down a 5% deposit.
The Treasury Committee warned the chancellor's plan made the government an "active player" in the market with a financial stake in propping up prices.
Labour say the plan amounts to a "spare home subsidy" to existing home owners.
Ministers aim to extend the current Help to Buy scheme to make it easier for first-time buyers or those looking to trade up to get access to home loans if they do not possess substantial equity of their own.
Example: for a £100,000 home the buyer will need to find £5,000 (5% deposit), the government will then add £15,000 to make the total deposit to £20,000 (20%) of the purchase price.
Further information for buyers is available from the Treasury website.
Potential buyers through Help to Buy should contact their local Home Buy agent, details can be found on the Home Buy website. Potential buyers should also read the Help to Buy Buyer’s Guide (to follow).
Subject to the terms below, it is intended that Help to Buy will replace First Buy from 1 April 2013.
What is the Help to Buy equity loan scheme?
Help to Buy is an equity loan scheme that makes new build homes available to purchasers struggling to buy. The Help to Buy equity loan is funded by the Government through the HCA.
Help to Buy is available in England from registered house builders and will run until 31 March 2016, or earlier if the funding is taken up. House builders may register with the HCA at any time.
The Help to Buy product will be available to eligible purchasers and will be paid directly to registered house builders. It offers a maximum 20% equity loan (minimum 10%) on new build properties up to a maximum purchase price of £600,000. The equity loan will be made by the HCA to the purchaser; there is no house builder contribution.
The HCA will agree projected unit sales and funding forecasts with house builders registered and contracted to deliver Help to Buy. These will be agreed for each of the initiative’s three years, initially for 2013/14, and subsequently for 2014/15 and 2015/16. Forecasts will become the anticipated contractual delivery position. They will be periodically reviewed by the HCA and may be increased or decreased, based on delivery performance.
Key contacts
For general Help to Buy enquiries please email helptobuy@hca.gsi.gov.uk
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