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Thursday, 24 July 2014

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‘Newbuy’ scheme launched to get things moving

The scheme launched this week making it easier to buy a brand new house has received a mixed response.

Under the Government’s “Newbuy” initiative, people aiming to buy a newly-built house will only need a five per cent deposit, rather than the 20 per cent many lenders are demanding.

So the deposit on a new, £200,000 house would be £10,000 rather than £40,000.

The scheme aims to help first-time buyers who want a brand new house, but is open to anyone who wants to move to a newly-built property.

It also aims to encourage the construction industry to build more houses, giving builders greater confidence in selling them.

So far the Nationwide building society and Barclays and NatWest banks are among the lenders backing the scheme, along with building firms such as Persimmon, Barratt, Bovis and Linden Homes.

But Adrian Tod, director with Hayword Tod estate agent, doubts it will have an impact on the overall property market.

He points out that many people prefer to buy an existing house, closer to facilities such as schools and shops – and usually with greater floor space.

“An older four-bedroom house is likely to be bigger than an newly-built four-bedroom house,” he says.

“New houses do fit a need. For a young couple who are struggling to get a mortgage, a new house with a new kitchen, bathroom and appliances may be an attractive option.

But the reality is that when the gloss wears off it may seem too small, particularly if there are children on the way.”

The scheme is not confined to first-time buyers and Mr Tod adds: “It may encourage a few more sellers to come to market, but it doesn’t create demand.

“What second-hand houses need are prospective buyers.

“It’s more of a stimulus for five or six big building firms than for the property market as a whole.”

Steve Hardaker, director of Allan estate agents, was slightly more positive. “It’s certainly better news for an industry that has taken a bit of a hit than the change in stamp duty, or the Halifax increasing its interest rate,” he says.

“And we do have customers specifically asking for newly built houses. Those at Heysham Gardens in Carlisle are new properties that are selling well.”

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