Help first-timers and yourself by selling HomeBuy

15 March 2010

During a period of significant change in the mortgage marketplace one thing has remained constant - the desire among potential first-time buyers to get a foot on the property ladder.

But in the past couple of years market forces have made life difficult for individuals looking to buy their first homes.

Higher deposit requirements, tighter lending criteria and reduced product options have meant first-time buyers without access to the bank of mum and dad have been largely excluded from the market.

In response to this situation the Homes and Communities Agency - the government agency that includes the delivery of low-cost home ownership in England within its remit - has had to adapt to the post-2007 lending climate, much as all other players in the housing industry have.

As a result, we have introduced a product called HomeBuy Direct - an equity loan scheme - and simplified the shared ownership lease for our NewBuild HomeBuy product to help maximise opportunities for those wanting to get a foot on the ladder.

We have involved lenders in the design and delivery of both products to increase uptake. For example, the revisions to our shared ownership lease give lenders more protection.

Are brokers recommending HomeBuy schemes as a viable alternative to buying homes on the open market?

These changes have come about through our regular dialogue with the industry, particularly with regard to how we can improve the attractiveness of the shared ownership sector to lenders.

The adjustments have been designed to maintain the current crop of lenders and encourage new entrants to the sector.

But we realise that the continuing success of our HomeBuy schemes depends on more advisers marketing them to clients.

I recently heard an interesting statistic from a national lender that is a big supporter of low-cost home ownership. Apparently, 50% of its low-cost housing initiative business comes from just 15 brokerages across the country.

So what is happening to clients who have the income and credit available but can’t raise the necessary deposit although they want to buy now?
Are brokers recommending the government’s HomeBuy schemes as a viable alternative to purchasing property on the open market? Or are customers being encouraged to save for deposits in the hope that one day they will have enough to make purchases on the open market?

The strapline that accompanies the government’s HomeBuy schemes is ’real help now’ but remember, this does not just apply to customers.

Developers and advisers who have supported the schemes have seen the benefits too, with sales and completions from clients they would otherwise have had to turn away.

HomeBuy schemes offer an invaluable access point for first-time buyers to purchase good quality new homes.

They also provide developers with sales opportunities and advisers with a rich source of potential first-time buyer clients.

With 2010 expected to continue the theme of limited liquidity and reduced appetite for high LTV mortgages you should regard HomeBuy schemes as a valuable tool to help your clients buy their first homes.