Hamptons International responds to Budget announcements
Nick Vaughan, Head of Residential Development and Investment at Hamptons International: “Today’s announcement to support first-time buyers is a step in the right direction to bring stability and growth back to the housing and, in particular, the development market. The changes will mean, subject to conditions, that a first-time buyer can buy a new-build property at a significantly more affordable loan-to-value rates rather than current rates which are currently pricing this type of purchaser out of the market.
Typical model:
Apartment Price = £200,000
Deposit at 80% LTV* = £40,000
Size of Gov’t loan at 80% of deposit = £32,000
Amount FTB** has to put as deposit = £8,000
As a % of value of apartment = 4.00%
*LTV = Loan to Value, **FTB = first-time buyer
The devil will be in the detail however. If implemented correctly, the re-introduction of the first-time buyer into the new build market, will further aid the recovery of this part of the market. The knock-on effect should be the further reinvigoration of the development and house-building sector.
Marc Goldberg, Head of Sales at Hamptons International: “With previously announced changes such as increased taxation, five per cent Stamp Duty for £1m+ homes and an increase in National Insurance contributions all about to take hold, it is refreshing to hear some good news from the Government with their commitment to help first-time buyers.
“The £250million injection announced today will grow the number of potential purchasers in the lower levels of the housing market, bringing more people onto the property ladder.
A lack of mortgage finance, particularly impacting first-time buyers, has hampered the property market since 2008. This measure should therefore provide some impetus for this sector of the market.
Mortgage finance for the mainstream property market remains tight, which continues to adversely impact the market as a whole. Any further Government measures to encourage more lending from banks would be welcomed.”
Adam Challis, Head of Research at Hamptons International: “The number of first-time buyers fell to a record low in 2010 and this is largely a result of difficulty in qualifying for a mortgage. We are therefore encouraged by this initiative which could help up to 10,000 first-time buyers. First-time buyers are vital to a healthy residential market as they normally represent a significant part of the housing market, but slumped only 17 percent of all loans in 2010.
This programme is also targeted at new build properties, meaning that there will be additional benefits to the house building sector. The number of house completions fell below 150,000 across the UK in 2010, 60 percent of the estimated need"
Source: hamptons.co.uk