Healey urged to clarify pitfalls of first-time buyer scheme

Chancellor John Healey is being urged to ensure first-time buyers are aware of the pitfalls of the new Your First Home scheme.

Buying a new build property, which the offer is restricted to, with a low deposit could leave first-time buyers vulnerable to falling prices, mortgage brokers are warning.

Access Financial Services points to evidence that buyers who resell newly built properties within a few years are more likely to sell for less than they originally paid.

Budget announcement

Analysis of Land Registry data for England and Wales, found that 12% of new-build homes resold within three years went for less than their original purchase price, compared with 6.3% of comparable older homes.

Access FS is calling for the scheme to be made available for existing properties as well as new builds, when Chancellor John Healey announces it as expected in the Budget today.

Getting people onto the property ladder is only part of the challenge.”

Karl Wilkinson, Founder and Chief Executive at Access FS (pictured), says: “Helping first-time buyers overcome the deposit barrier is important, but getting people onto the property ladder is only part of the challenge.

“We also need to make sure they understand the financial commitments they are taking on and how these could affect them further down the line.

“The Government has an opportunity to help more people buy their first home, but the scheme needs to support informed decisions as well as access to finance. Buyers should have a clear understanding of both the immediate benefits and the longer-term commitments.”

Government loan

Under Your First Home, eligible first-time buyers in England will be able to purchase a new-build property with a 2.5% deposit, supported by a Government-backed equity loan worth 20% of the value.

Buyers will need to understand how the loan is repaid, what happens when the interest-free period ends and how changes in property values could affect their financial position, Access says.

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Author: Gemma