What interests me most is the HomeBuy Direct plan. It offers first-time buyers loans for up to 30% of the purchase price of new-build homes. If they repay them within five years they won’t have to pay interest. I expect this will be an attractive option for many.
But this is where I see problems arising. The government is worried about the housing market and the dearth of consumers buying property and moving home, as well as falling property prices. But if you only make new-build homes attractive to first-timers, why would they want to buy older properties?
Consequently, even fewer first-timers will be available to start property chains as they will opt for new- builds. This means home owners will lower prices even further to attract buyers, making things worse not better. The scheme is aimed at ensuring building companies stay in business as opposed to helping the wider market.
Also, should first-timers receive such help if they were unable to obtain mortgages in the first place? Isn’t this irresponsible lending? The government should have opted for a blanket Stamp Duty holiday to kick-start the market but this has not materialised.