Housebuilders are lobbying the government for quicker help for first-time buyers after it emerged the shared equity scheme announced in the Budget would not kick in until September.
The £250 million FirstBuy initiative announced by Chancellor George Osborne last week will allow new buyers to take out a mortgage for 75 per cent of the cost of a house with only a 5 per cent deposit.
The industry welcomed the plan to boost demand but raised concerns the government was dragging its feet over the scheme’s implementation. Housebuilders said it would be possible to roll out FirstBuy much sooner than September given its close resemblance to the previous Home Buy Direct scheme.
A senior source at a major housebuilder said: “FirstBuy is exactly the right initiative at exactly the right time. The key challenge now is to get it up and running as soon as practically possible.
“If the government can get it up and running before September then all the benefits will result that little bit quicker.”
Galliford Try managing director for housebuilding Greg Locke said: “We would like to see the scheme implemented as quickly as possible.
“Government does seem to be listening to what the industry has been saying and generally there has been some good dialogue.”
Bovis Homes chief executive David Ritchie also said the earlier the scheme could be launched the better. He added: “The Budget measures were positive for housing. However, we must appreciate that the main issue remains low levels of high loan-to-value mortgage availability.
“We believe the only sustainable solution is one that involves mortgage indemnity insurance and bank lending at 95 per cent.”
The Homes and Communities Agency is expected to administer the FirstBuy scheme.
Open to households with joint income below £60,000 a year, it will provide an equity loan worth up to 20 per cent of the value of the property, jointly funded by the government and housebuilders.
The scheme was widely welcomed by housebuilders, which have long argued that banks’ reluctance to offer mortgages for first time buyers was strangling the market.
Construction Products Association economics director Noble Francis backed the attempt to help first time buyers, but said he would “be surprised” if it helps as many as 10,000 people.
FirstBuy was among a package of measures in Mr Osborne’s Budget that were designed to boost the struggling sector.
The Chancellor pledged to cut regulation, switch to a “presumption in favour of sustainable development” in the planning system, bring forward more public sector land via trial land auctions and assist institutional investors through changes to stamp duty.
The Home Builders Federation described the Budget as a “shot in the arm” for housebuidling.
Executive chairman Stewart Baseley said: “It is crucial that all the announcements are built on, regulation is reduced, land supply increased and the planning system simplified.”