NewBuy scheme could wreck market, warns RICS
Thursday 7th June 2012
The Royal Institution of Chartered Surveyors has delivered a stinging attack on the Government’s NewBuy mortgage scheme, suggesting it could wreck the entire housing market.
It did so as Miller Homes became the latest developer to offer the 95% mortgages, which have an indemnity funded by taxpayers and home builders.
Chris Endsor, chief executive of Miller Homes, said: “We are delighted to be able to offer NewBuy to our customers as we believe it represents an achievable and responsible step towards boosting home ownership, and provides an important stimulus for the housing market.”
But the controversy over NewBuy does not look like going away. The RICS has embedded its anti-NewBuy stance into its official housing policies and says that NewBuy could reduce demand for ‘second-hand’ property and play havoc with lenders’ affordability calculations.
It says: “Without stimulating the second-hand market as well as new-build, chains and overall transaction levels will stagnate.”
The RICS says that the NewBuy scheme may not even help first-time buyers when they come to buy second-hand properties.
The body is to include specific guidance to valuers of new homes, to ensure that they understand the impact of NewBuy and make sure it ‘does not adversely impact the market’.
But while the RICS would prefer to see more local Lend a Hand schemes, where buyers put down deposits of at least 5% and local authorities provide an indemnity of up to 20%, the organisation says the ‘dire state’ of local government finances makes this unlikely.
The RICS is calling on the Government to help local authorities introduce more Lend a Hand schemes.
It also wants to see the Government encourage more investment in the private rented sector, including encouragement of ‘build to rent’ schemes, and for tenants to be offered longer tenancies.
The RICS produced its new housing policy after consulting its members and will now lobby the Government.
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