Countrywide welcomes NewBuy Scheme as a breakthrough for first time buyers, homeowners and the new build market

Countrywide

Monday, March 12, 2012

UK's largest estate agent warns that NewBuy's success is restricted to new build and is not a 'sticking plaster' for the void in house sales that will come after March

Commenting on the Government's New Buy Initiative, Grenville Turner, Chief Executive of Countrywide, the UK's largest property services Group, said:

"We strongly support the NewBuy mortgage indemnity scheme and believe it is a huge break-through for the new build sector. Most importantly, we believe that NewBuy addresses the biggest issue affecting house transactions - deposit affordability.

NewBuy is not exclusive to first time buyers - the £500,000 threshold for eligibility is generous and will help a number of first time buyers and homeowners wanting to trade up. Homeowners trapped by rising standard variable rates now have an alternative method to fund their move. That said; we've yet to see how many of the lenders signed up to NewBuy will support part exchange, which plays a crucial role in today's market, generating up to 50% of new build sales on some sites.

From a mortgage perspective, the new build market has suffered at the hands of cautious lenders who have imposed restrictive loan to value criteria (LTV) for new build mortgages in recent years. A typical new build mortgage product can often require a 20% deposit while mortgaging a re-sale property is possible in today's market with a 5% deposit. NewBuy will help house hunters borrow against a 5% deposit to finance their move, which has not been widely available since the 'credit crunch' in 2008.

However, with only three lenders signed up to the scheme at present, we hope the funding is in place to cope with the pent up demand in the market and that there are tight controls over how NewBuy mortgage products are priced. This would stop the inevitable temptation for lenders to charge 'premium' interest rates for NewBuy mortgage products to offset any perceived risk. If that were to happen, we would strongly object on the grounds that clients who are eligible for NewBuy due to their limited deposit affordability would effectively be penalised and forced to pay premium interest rates through a scheme that is supposed to assist them.

In addition, we would like to stress on behalf of all homeowners that NewBuy is not a 'sticking plaster' to replace the void in house sales that will be left by the Stamp Duty Land Tax holiday, which ends on 25th March . NewBuy is restricted to new build sales only, which made up approximately 5% of all mortgage lending last year. Lenders estimate that the Stamp Duty Land Tax holiday assisted up to 170,000 property sales and stimulated hundreds of thousands of house price purchase chains, while NewBuy is limited to new build sales only, which have no onward chain.

 While we are supportive of NewBuy as a vital tool to kick-start the new build market, NewBuy lacks any funding/provision to assist homeowners with limited equity trying to sell, which we hope the Government will address in next week's Budget."

ENDS

Notes to editor:

Countrywide is the UK's largest and most successful estate agency and property services Group, operating more than 47 brands and 1,300 associated branches across England, Scotland and Wales.

Working with over 350 national developers and local builders, Countrywide's network of expertise helps more people move than any other business in the UK and is a leading provider of estate agency, lettings, mortgage services, land and new homes, franchising, auctions, surveying, conveyancing and corporate property management services.

Press Contacts

Press Office

0207 7588494

Contact
Follow us on Twitter Follow us on Twitter
Our website uses cookies so that we can provide a better service. Continue to use the site as normal if you’re happy with this, or find out how to manage cookies.
x