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First time buyers reveal support for state scheme

First time buyers reveal support for state scheme

Category: Mortgages

Updated: 27/04/2011
First Published: 26/04/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

First time buyers have given their backing to the Government's First Buy Scheme aimed at helping more people onto the housing ladder.

The scheme, which was revealed in last month's Budget, allows first time buyers to purchase a new-build property using just a 5% deposit.

A further 20% deposit is provided in the form of a five year interest-free loan jointly funded by the Government and the house builder.

A month after the announcement, Rightmove found that around 40% of potential first time buyers were more likely to purchase a new-build property, with nearly half of this group indicating that they were 'much more likely' to buy.

Only one in five surveyed said the scheme was not attractive to them.

However, a limitation to the scheme was revealed by the research.

First Buy can only be applied in relation to the purchase of new build properties, yet more than a third of first time buyers questioned said they do not wish to purchase a new build home.

Miles Shipside, director of the property website, said a major issue in the current property market is the lack of purchasing at the foot of the resale market.

"First time buyers traditionally fulfil this function, and in doing so start chains which allow those at the bottom of the housing ladder to trade up.

"The channelling of first time buyers into new build properties loses this benefit to the market.

"Opening up similar initiatives to include resale properties would be a real boost for the wider housing market and encourage first time buyers to get involved by allowing them greater choice."

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