After various first-time home buyer initiatives have failed to provide satisfactory results, the government has recently implemented a £400m “Get Britain Building” programme designed to stimulate the growth of new building projects in the UK. The new scheme is expected to cause the construction of 16,000 homes, some of which are expected to be built on building sites that were affected by the financial woes of the recent recession.

This certainly isn’t the first time the government has launched an initiative that was supposed to increase the number of first-time buyers in Britain. More than 10 years ago the first such initiative, HomeBuy, was launched and was subsequently followed by a plethora of similar initiatives that never really lived up to their expectations. In fact, despite the slew of first-time buyer initiatives, the government has been unable to stop the continued decline in the number of yearly first-time buyers in the UK, of whom there were 600,000 twelve years ago, yet only 200,000 last year.

However, some analysts believe that this initiative could actually be effective, especially if it is accompanied by the introduction of 95% mortgages that are partially backed by taxpayer funds, a move that would give hundreds of thousands of potential first-time homebuyers the ability to obtain financing for home purchases. Doing this would cover both “sides of the coin,” as the “Get Britain Building” programme would provide the funds needed to build more than 15,000 houses, and the availability of government backed 95% mortgages would increase the number of available buyers.

Although 95% mortgages have become more readily available in the homeowner market, it is rare to find such financing for a newly built house. The new indemnity scheme that is expected to be implemented along with the “Get Britain Building” would allow lenders to offer 95% mortgages on newly built homes, while only being at risk for about 80% of the funds.

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