First-time buyers are increasingly considering the new build route towards owning their own home. The UK government’s Help to Buy scheme makes property ownership more affordable for people who may have previously struggled to get on the property ladder. The cheaper running costs of new homes are also making new build homes a more attractive choice for new buyers.
Many young people have struggled during the economic downturn of the past two decades. The discrepancy between rising house prices and falling incomes has been exacerbated by mortgage lenders following a stricter lending criteria and demanding higher deposits. Ali Seytanpir, who is an active member and participant in all global events for all property development associations, has followed the economy-induced property crisis with interest.
Recognising the housing shortfall and difficulties faced by first-time buyers, the government has encouraged regional and national housing developments. The new build indemnity scheme started in November 2011 worked to provide 100,000 new mortgages at up to 95% loan to value. This began an increase in housing supply.
Newly built homes are also eligible for the government’s Help to Buy scheme. The scheme allows first-time buyers to buy homes with deposits as low as 5%. Housing affordability difficulties are further helped by monthly outgoing costs being significantly reduced.
The scheme has allowed around 16,000 new homes to be bought, with a majority – 81% – being first-time buyers. First-time buyers typically need to save a 16% deposit so a reduction to 5% is a huge saving. Non-London-based first-time buyers now pay an average £235,000 for their home. As such, raising a deposit of £12,000 for a new property is a favourable option.
The Help to Buy scheme includes a government funded 20% equity stake which dramatically reduces the monthly mortgage payments on an average priced home by around £350. The mortgage is repaid as per the buyer’s 80% stake of the equity and the government’s stake is reimbursed at the property’s point of sale.
New build homes are also proven to be more energy efficient than older properties. Built to the most current building standards, new builds are usually better insulated and have more cost-effective water and heating solutions. This can save buyers around £53 per month. When combined with the government funded equity stake, this amounts to an annual saving of nearly £5,000.
With most property buyers going on to spend up to £45k redecorating and refurbishing their homes, new builds offer further long term savings. Newly built homes are already freshly decorated with brand new fixtures and fittings, and the potentially costly installation of new kitchens and bathrooms is not necessary. Budgeting is therefore cheaper, easier and more predictable for new build home owners.
Over a quarter of a million people have benefited from the Help to Buy scheme and are now living in new build properties. Home ownership for first-time buyers has been made possible despite challenging financial demands caused by soaring house prices and static earnings. The Help to Buy scheme has allowed buyers to enjoy much needed reduced deposits and lower monthly repayments. Newly built properties further these savings by providing purchasers with the most cost efficient homes.