First Time Buyers and Council House Tenants Helped By Coalition Plans

The coalition government will today announce plans to kick-start the country’s ailing housing market.

The move will see the taxpayer backing the mortgages of thousands of first-time buyers and the right for council tenants to buy their homes at a knockdown price extended.

David Cameron and Nick Clegg will say the UK is facing a situation where “lenders won’t lend, so builders can’t build and buyers can’t buy”. The “radical” program will seek to address the problem by enabling first-time buyers to borrow up to 95% of the value a new home, with the public underwriting a portion of their loan.

With banks currently asking for a typical deposit of 20%, the Treasury could be liable for any losses if the housing market took a turn for a worse and those who entered the program defaulted on their loans.

Council tenants will be able to buy their homes for half the market value under the new scheme. This would mean the average saving – or immediate potential profit – made by those buying their property would increase from £26,000 to £52,000. In London and the south-east the discount could rise from £38,000 to £76,000.

The plan will also allow housing developers to apply for part of a £400 million fund to help them start to build on land that would otherwise be uneconomical to develop. This part of the program, which applies to England only, aims to build 16,000 new homes and create up to 32,000 jobs. A further half a billion pounds will be made available to local authorities to create the infrastructure necessary to support new development.

Housing Minister Grant Shapps told the BBC: “The problem that we have is that lenders aren’t lending, builders aren’t building and people can’t get their deposits together to buy so we’ve got a triple problem in the housing market.

“What we want to do is make it easier for first-time buyers… who say the biggest problem we have is the amount of deposit that we have to get together – that is their biggest blockage.”

First Time Buyers More Likely To Buy Following FirstBuy Scheme

45% of potential first-time buyers state they are now more likely to get on the housing ladder thanks to the Government’s FirstBuy scheme, according to new research from Rightmove.

The figures will be a boost for the FirstBuy initiative following its full launch in September, although Rightmove’s research does raise some causes for concern. In terms of awareness of the scheme, whilst 59% stated that they had previously heard of the scheme, over a third (37%) of first-time buyers stated that they had not. Of those that were aware of the scheme, 22% said they did not understand whether or not the scheme could help them to purchase for the first time.

New Build Development News: Increasing number of new build properties ‘is great news’

The number of new build properties that began construction in the first quarter of 2011 stood at 29,140, government figures show.

Vernon Pethard, managing director at New Homes for Sale, said this is “great news” and should lead to a jump in new home sales reservations this year.

“Buyer demand is clearly there,” he noted, citing increasing numbers of visitors to his site in the search for new build properties.

However, Mr Pethard pointed out that the government must do more to help house builders construct more homes.

“Despite the recent increase in supply, there are still nowhere near enough new homes coming onto the market, which is placing upward pressure on property prices across parts of the country, preventing many would-be first time buyers from buying a new home.”

This is resulting in more people “being forced” into renting, which pushes rents up higher while social housing waiting lists are “soaring”.

New Build Development News

First time Buyers Giving Up On Home Ownership

Nearly a third of potential first-time buyers say they have given up on the idea of buying a home, according to research from Moneysupermarket.com.

Those who were still hopeful of getting a foot on the housing ladder said they didn’t expect to be in a position to secure a mortgage until they were 38, rising to 43 in London.

The study found that first-time buyers are currently putting down an average deposit of 23%, which works out to £36,800 for a property worth £160,000.The majority of first-time buyers are struggling to save this without help from their families.

Government figures released earlier in the week showed that average prices rose to £205,565 in March.

First Time Buyers Levels Reach Peak

The number of people hoping to get on the property ladder has reached its highest level for 12 months as first-time buyers brace themselves for an increase in house prices, research indicates.

Just over 26% of people who expect to buy a property during the coming year were first-time buyers in April, up from 22.8% at the beginning of the year and the highest level since the second quarter of 2010, according to property website Rightmove.

The group said the increase is the result of many first-time buyers expecting house prices to increase during the coming year, with 33% predicting a rise in property values, compared with 22% at the start of 2011.

Fewer people believe house prices will be lower in a year’s time, at 25% compared with 34% in the previous quarter, suggesting buyers are feeling increasingly confident that the recent slide in prices may have bottomed out.

But raising a sufficiently large deposit is still a major stumbling block for first-time buyers, with 44% citing it as their biggest concern.

Miles Shipside, director of Rightmove, said: “Despite prospective first-time buyers still being frustrated by deposit-hungry lenders and stifled by sellers unwilling to reduce their prices, this survey forecasts an upturn in their activity in the next 12 months.

“This is perhaps driven by their sense that the deals on properties to buy and mortgage funding criteria are not going to improve and so more have simply accepted these conditions and decided to act.”

>First Time Buyers Need More Advice

>First time property buyers should receive more help from UK mortgage lending companies to ensure the housing market does not remain static, an expert has suggested.

Timothy Lambert, head of consulting at Ducalian, commented: “Banks are offering 30-year mortgages as opposed to the traditional 25 and this helps spread payments. However, any solution always means more debt and surely people must be wary of that by now.”

He noted that uncertainty surrounding the property market could deter people from investing in homes.

“We simply do not know what will happen to property prices in the near future, and with many people struggling to pay the bills as it is, is additional debt wise?”

Mr Lambert’s comments come after research from the Association of Mortgage Intermediaries predicted that levels of housing transactions and lending in 2011 will remain similar to those recorded last year.

The research also highlighted the fact that fewer first time buyers obtained mortgages last year despite higher loan to value loans being offered.

Mortgage Rate & Home Loan News

>First time Buyers Find New Ways onto the Property Ladder

>First time buyers and property sellers are turning to unusual techniques to move onto or up the property ladder, according to the Little House Company.

Jane Marr, director of the website, which deals in residential property investments in London and other parts of the UK, said both parties are getting “more imaginative” when trading in the property market.

“A trend emerging is rent to buy. The method is popular in the US and Australia and I think it will increase in the UK as mortgages get harder to come by,” she noted.

If you have bad credit then you will need some time to fix it. A Rent to Buy Lease Option Agreement gives you the future Homebuyer the opportunity to live in the Home you want to Buy while working on how to repair your credit.

During the Credit Crunch Rent to Buy is proving to be one of the best ways of helping Homebuyers get on the Property Ladder. Rent to Buy allows First Time Buyers and Tenant Buyers that are struggling to get a large Deposit the legal right to buy a property within an agreed timescale at an agreed price.

The Rent to Buy Scheme can even help existing homeowners to Rent to Sell. People that are in need of Negative Equity Help can Rent to Sell using the Rent to Buy Homebuy Scheme. Private Sellers, Buy to Let Landlords, Property Developers and For Sale By Owners are all taking advantage of Rent to Sell and Rent to Buy.

Meanwhile, research by Rightmove found the average home is taking longer than ever to sell, while asking prices decreased this month by 3.2 per cent – down to a three-year low average of £229,379.

>West Hampstead Apartment for Sale, Ideal for First Time Buyers

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>Home Ownership Declined to 67.9%

>Despite recent problems in housing and mortgage markets, the desire to be a home-owner in the UK is stronger than ever, reports the CML. However, home-ownership has been in decline in the last few years, following a long period in which an increasing proportion of people succeeded in fulfilling their desire to be an owner-occupier. According to the English Housing Survey, owner-occupation peaked in 2003 at 70.9% of the population but, by 2008/9, it had declined to 67.9%.

This recent downturn ended a period of more than a century of almost unbroken growth in owner-occupation, and led some to assert that the golden age of home-ownership was over – at least, for now. But our surveys show no decline in aspirations to home-ownership in the long term, which remain at an all-time high.

Recent trends in owner-occupation can therefore only be explained by a combination of tightening affordability constraints, particularly for first-time buyers, a shortage of mortgage funding since the credit crunch in 2007, and the impact of the economic downturn on both the capacity and desire of people to move into home-ownership, at least in the short term.

London Property Rent Remains Cheaper Than Mortgage for First time Buyers

New research released by Santander has concluded that the vast majority of first-time buyers for a home credit deal would be better off purchasing a property as opposed to renting one.

Following the government’s pledge to help first-time buyers get their foot on the property ladder by increasing the number of new homes available, the mortgage lender conducted a study into the property market in the UK.

It found that, in the aftermath of the worst of the global economic downturn, average monthly rental prices now exceed those for the average repayment on mortgages in every area of the country apart from London.

London’s property sector remains in its own disconnected bubble away from the rest of the nation, with rental prices within the capital around 56 per cent higher than elsewhere, Santander stated.

The average monthly rent in the city is £701, but because real estate remains expensive to purchase there, fist-time buyers would end up paying around £359 per month on their mortgage.