FirstBuy allows people to take out a mortgage for just 75 per cent of the cost of the property, provided they can stump up a five per cent deposit, and the aim is to help more than 10,000 first-time buyers in England over the next two years, plus a smaller, number across Scotland, Wales and Northern Ireland. The scheme is open to those with a household income of less than £60,000 a year who can put down a five per cent deposit.
Already, one year in, the FirstBuy scheme has helped a large and growing number of first time buyers on to the first rung of the property ladder. This is something to be applauded as any proactive effort aimed at helping young people and any first-time buyer purchase their first home is brilliant news for the housing market as a whole.
The Government had made up to £250m available over the next two years to support the FirstBuy scheme, which applies to new houses only, of which up to £210m was earmarked for England, with the remaining money shared between Scotland, Wales and Northern Ireland.
After buyers have owned their home for a year, they will be able to buy bigger shares or 'staircase' it, if they choose to do so. 'Staircasing' is purchasing a higher share of the property or making part repayments on the FirstBuy equity loan. The repayments will be at the current market value and ten per cent of the total market payment is the minimum additional payment buyers can choose to make.
The scheme is overwhelmingly a positive one as first time buyers are at the vanguard of any resurgence in the property market. Without them, of course, the property ladder will creak and fall apart, with home owners being less able to sell their homes and thus move up the ladder.
First-time buyers should look to the long term when considering whether to use FirstBuy as a way to get on the property ladder and regard it as an investment rather than as a means to get rich quick. But if a first-time buyer with the requisite income level is looking to seriously realise their dream of home ownership, the FirstBuy could be the solution.
Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 50 people serving private and corporate clients. For further information: www.latimerhinks.co.uk or call 01325 341500.