NewBuy reservations hit 600 – and hailed a success

Thursday 28th June 2012

NewBuy reservations have hit the 600 mark in the three months since the 95% mortgage scheme, which is jointly indemnified by taxpayers and developers, was launched.
 
The Home Builders Federation said the figures revealed a ‘remarkable’ start for a scheme only introduced on March 12. It said that at launch there were seven builders signed up, and there are now 17, together with five major lenders.

Stewart Baseley, executive chairman of HBF, which helped developed the NewBuy scheme, said: “It is still a challenging market but there are options for people looking to buy their own home. NewBuy is really starting to take off and allows people to secure a home with a 5% deposit. In addition, many builders operate shared equity schemes that make buying more affordable.
 
“Reaching 600 NewBuy reservations in such a short time is a fantastic start and clearly demonstrates the customer need.
 
“Over the coming years, NewBuy will make a real difference and help tens of thousands of people realise their ambitions of home ownership.
 
“In turn this will then help kick-start new home construction, creating economic growth and thousands of jobs across the country.”

However, according to the magazine Inside Housing, developers are still unhappy with the NewBuy scheme because of the high mortgage rates being charged.

The magazine claimed that in a meeting with housing minister Grant Shapps and business secretary Vince Cable, builders had said that the NewBuy scheme was failing.

An un-named source who attended the meeting told Inside Housing: “There was some criticism of the scheme and the lenders’ reaction to it, in particular the price of the product.

“They [the mortgages] are priced as if they are 95% [loan to value] mortgages whereas they should be priced as if they are 85%. That was a big issue for the house builders.”

NewBuy loans cost borrowers up to 6%.

Separately, John Cridland, director general of the Confederation of British Industry, called on the Government to make the NewBuy scheme more appealing to first-time buyers, saying that the construction industry would also benefit.