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Thursday, August 21, 2008
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| Caroline Flint recently announced the Government's new measures to "support first-time buyers".
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Location: Blogs PricedOut |
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| Posted by: PricedOut |
Sat, 17 May 2008 11:16:50 GMT |
Caroline Flint recently announced the Government's new measures to "support first-time buyers".
http://www.theyworkforyou.com/wms/?id=2008-05-14a.58WS.1&s=speaker%3A10202#g58WS.2
The full text of the speech is below along with our responses. Please tell us what you think of her speech, You could also write to Caroline Flint at pscarolineflint@communities.gsi.gov.uk.
First Time Buyers - Written Ministerial Statements
Wednesday, 14 May 2008
This statement sets out the steps we are taking to provide more opportunities for first-time buyers to access the housing market.
PricedOut comments – “Can’t afford to buy?” – “Don’t worry we have figured out a way to put you into more debt for longer than you ever thought possible.”
The vast majority of people in this country aspire to owning their own home. People value the security of homeownership, the sense of having a stake in the community, and the chance to build up assets.
PricedOut comments – Agreed. “Amen” in fact J
Rising prosperity in this country over recent years, with high employment and low interest rates, has meant that more people have been able to aspire to homeownership. Since 1997, there are 1 million more households who own their own home. One hundred and ten thousand have benefited from our low cost home ownership programmes, enabling them to get a first foot on the property ladder.
PricedOut comments – the low interest rates were not enabled by the Bank of England.. They were enabled by the Lenders using risky new money sources such as the short term wholesale money market. With the rise of Buy To Let we dispute the 1 million extra owner-occupier claim made. We think it means dwellings in private ownership – which is a different thing altogether..
However, a fundamental mismatch between supply and demand has now put house prices far beyond the reach of many, particularly first-time buyers. Ten years ago, the average house price was just 3.5 times the average income. Now, the average house costs more than seven times the average income. And while interest rates have fallen, the result is still that fewer first-time buyers are able to enter the market. Not only is this a potential brake on aspiration and social mobility, it may also cause stagnation in the rest of the market.
PricedOut comments – We agree with most of what is being said here. Out of reach to many? – Yes. Dwindling social mobility is not driven by house prices – it is driven by university fees. Work-force geographical mobility may be linked to the housing market. House price stagnation should not be feared or despised. House market stagnation (low deal volume) is due to the recent phenomenon of lenders not lending.
The long-term solution is to build more homes to overcome this housing shortage. This is why we are embarking on a major housing supply programme under which we want to see outputs rising to 240,000 new homes a year by 2016. But in the short-term, we want to do more to ensure that more potential first-time buyers are able to enter the property market.
PricedOut comments – More new homes? – We completely agree. More first time buyers would be able to enter the market if prices were lower and if they did not have to compete with investors and speculators.
The current market situation makes this more difficult. Last week we announced a package of measures to help support home owners, including measures to ensure that financial advice and support is available for borrowers who may be facing difficulties with their mortgage.
PricedOut comments – Repossessions are bad for everyone, so any help to avoid them is good.
But we also want to see mortgages available for those who can sustain home ownership, and at the same time we want to support housebuilding.
PricedOut comments – We agree.. Builders should build, and lenders should lend. You know it makes sense.
Through our shared equity schemes, we already aim to help 75,000 more householders on to the property ladder over the next three years. Today I am announcing how we can go even further than that by focusing spending to support the housing market and those looking to get on the housing ladder. In the Budget the Government announced two new open market homebuy products offering greater affordability to first-time buyers. We have also announced a purchase assistance grant of £1,500 to the first 2,000 purchasers to help them with the costs of moving into a new home.
PricedOut comments – People don’t trust or want shared equity – regardless of what the scheme is called. Let prices drift down to the point of affordability. Propping up the current market price levels, harms first time buyers.
Today I am announcing an expansion of the eligibility criteria for these products so that more people can benefit. It is right that we continue to give priority to key workers and tenants in the social rented sector. But from today both the new build homebuy and open market homebuy products will also be open to all first-time buyers with a household income below £60,000 who could not otherwise afford to buy. This will allow, for instance those who work in public services but who are employed by the private sector, to access this support.
PricedOut comments – You might make it available but will people apply for it? Who wants to buy in a falling market?
In addition we are focussing up to £100 million spending to expand open market homebuy to help an additional 2,500 first-time buyers purchase a newly built home in 2008-09. Purchasers will be able to apply to use the new shared equity products announced on the 1 of April to purchase a new-build home of their choice on the open market. The new products help to improve affordability to buyers by offering an equity loan of up to 50 per cent. of property value. This scheme will make a wide choice of new property open to prospective buyers while also helping to support the new build market and maintain housing supply.
PricedOut comments – Why do we allow the market complete freedom when prices are going up, and only intervene when prices are going down? We think that take-up of this scheme will disappoint the Government and Estate Agents alike.
This change will more than double the number of families helped by the new open market homebuy products this year.
PricedOut comments – only if the offers are taken up.
Alongside this, we are maintaining our commitment to deliver much needed social rented homes, keeping up delivery in 2008-09 and with a target of 45,000 such homes in 2010-11.
PricedOut comments - Good, we support adequate provision of social homes, well done..
The current market also provides opportunities for housing associations to buy new properties from housebuilders at competitive prices. The Housing Corporation has already been working with housing associations and housebuilders to take advantage of these opportunities. In the first three months of the year, housing associations bought 1 800 homes from developers through the national affordable housing programme. Nearly 840 of these were for low cost home ownership and 935 were for social rent.
PricedOut comments – Would it be picky of us to insist that homes bought by Housing Associations should meet the specifications for social housing? Why aren’t these new properties going to be sold on the open market at open market prices?
I have today asked the Housing Corporation to use flexibilities available to them in their current programme to fund more such purchases where they represent good value for money. The corporation estimates that it may be able to fund an additional £200 million of direct purchases from housebuilders in the current financial year, helping yet more families into low cost home ownership and rented accommodation.
PricedOut comments – those properties should certainly be occupied – that is common sense. We still don’t see why the fat cat building industry should be bailed out just because the lenders have become temporarily skittish about lending.
A marketing campaign for all the homebuy products will be launched in partnership with lenders and housing associations in order to raise awareness of the new criteria. Government will work with the TUC and individual trade unions to promote these opportunities to their members.
PricedOut comments – No one will listen. First Time Buyers should not make the mistake of buying into a falling market.
Following Government's meeting with the Council of Mortgage Lenders and lenders, we will continue to work with a range of lenders to support a fair and well functioning UK mortgage market. We will also work with lenders to encourage them to develop their own shared equity products.
PricedOut comments – certainly lenders should come out of their shells and start responsible lending. There is nothing wrong with a 95% loan to a borrower with proof of income and at a reasonable multiple. Particularly since part of this is insured at the borrower’s expense to make sure the lender cannot lose. As for shared equity financial products – we hope they will gather dust on the shelves through lack of interest. |
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