'200 years for NewBuy to reach target if sales continue to falter', warns Labour

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Local Government

Labour says it will take the Government 200 years for its flagship NewBuy scheme - which aims to overcome the deposit gap for new home buyers - to reach its target of helping 100,000 homebuyers on to the property ladder if sales continue to falter.

It follows official figures released yesterday showing the scheme supported just 250 sales in the first four months of the scheme.

Under the scheme, individual home builders partner up with one or more mortgage lenders who offer 90-95% loans on their new-build properties, allowing would-be buyers to purchase a home with a 5% deposit.

The scheme - which will reduce the deposit on a typical home from £40,000 to just £10,000 - is being underwritten by housebuilders and the Government.

The scheme didn’t get off to the best of starts when it was launched in March with lenders not embracing the scheme as first envisaged.

Despite the number of builders and lenders registering for NewBuy steadily increasing, figures released by the Government yesterday showed just 250 home purchases had been completed under the scheme.

Labour’s shadow housing minister Jack Dromey – who has called for the scheme to be extended to all home purchases, not just new build – said it will take 200 years for NewBuy to help 100,000 homebuyers buy their own home based on the recent take-up.

He said: "This shows the vast gap between the Government’s rhetoric and the reality for those who want to realise their dreams of owning their own home. The Prime Minister and then Housing Minister Grant Shapps claimed NewBuy would help 100,000 people buy their own home. Today’s stats show they have only achieved a quarter of one percent of their own target in the first six months, just 250 homes.

"This out of touch Government hyped up NewBuy, raising the hopes of families all around the country. But the truth is this scheme does nothing to reverse the Government’s failed housing and economic policies which have led us into the longest double-dip recession since the Second World War and the biggest housing crisis in a generation.

"The Government needs to drop the hype and change course by implementing a real plan for homes, jobs and growth."

The Home Builders Federation (HBF) announced earlier this month that NewBuy had hit the 1,300 reservations mark - and six months on from launch was “starting to really take off”.

It says there are now more than 30 builders selling homes using NewBuy and a sixth lender, Aldermore, announced it was recently offering the mortgages.

Stewart Baseley, executive chairman at HBF, which proposed and developed the scheme with the Council of Mortgage Lenders, said; “We are now starting to gain some real momentum and with more and more builders and lenders coming on board are confident NewBuy will make a real difference.

“We know people want to buy, but many have been thwarted by the current large  deposit requirements. NewBuy is proving a lifeline for people as it allows them to buy their dream home with a 5% deposit. Many NewBuy first-time buyers had been trying to save a deposit while staying at home with their parents or living in rented accommodation. Other buyers have been home owners stuck in a house no longer big enough for their growing family. NewBuy is proving a real winner for them after such a frustrating time.” 

The scheme has also proved popular with housing associations. Kate Davies, chief executive of Notting Hill Housing, tweeted: "Dismay at only 250 homes sold with mortgage support - but it's immensely popular with our buyers. 14 complete, 14 to go. Give us more!"