The Starter Home Initiative was created with the aim of ‘unlocking home ownership for a generation’, according to David Cameron at the time it was announced.
It aims to make 100,000 new-build homes available for first-time buyers under the age of 40 with a discount of at least 20 per cent of the property value.
Twenty per cent off the purchase price of a property does sound like a great incentive but how would this work in practice?
Richard Wootton Senior Partner of the firm discusses the scheme with his assistant Olivia Harrill (both pictured above) aged 25 and a potential first-time buyer:-
Richard, the government’s new scheme sounds like a great saving for potential first time buyers such as myself, but how does it actually work?
The government plans for New homes will be built specifically for this scheme with the view to attracting first time buyers. The houses will be built on brownfield land and offered at 20 per cent lower than the market value.
The government hopes that this will enable more young people such as you Olivia to get on to the property ladder.
Although the finer details are yet to be confirmed, it is believed that should you sell the property within the first five years you must offer it to another first time buyer at the same discount. There may be a restriction on the registered title with regards to disposing of the property so we would need to look at this carefully as part of our investigations.
Would I be eligible for this? Is there any restrictions on who can benefit?
You would be eligible for this, First-time buyers under the age of 40 may sign up to this scheme. You will of course have to be able to raise enough money to purchase the property, alternatively you would need a sufficient deposit and be eligible for mortgage funding.
What about getting a mortgage, would banks still lend to me if I was purchasing a property under this scheme?
Banks and building society’s will be offering mortgages on the homes but are yet to confirm whether there will be a product specifically for this type of purchase.
With such a big discount being given, will this result in a poorer quality property?
No this should not be the case. The government has advised that a new design panel, including world famous architects such as Sir Terry Farrell and Sir Quinlan Terry will be established to ensure that new homes are not only lower cost but also high quality and well-designed, giving hardworking house buyers attractive homes that meet the demands of modern life.
How are the developers able to offer this saving?
The savings are to be made by relaxing levies and charges that come with acquiring planning to build on certain land sites. The government say that these kinds of charges (known in the property world as Section 106 charges) can add an extra £15,000 on to the price of building, per home per site.
Over a large site, this number can add hundreds of thousands of pounds to the costs of building for the developers. By freeing the developers of these charges, the government aim to get 20 per cent off for you.
This sounds brilliant Richard when can I move in?
Don’t book your removal van just yet Olivia… the houses aren’t actually built yet but this is expected to start within the next few months.
Visit new-homes.co.uk/starter-homes/ to register your interest in being part of this government scheme.
If you are a first-time buyer or looking to move or invest in property give one of our friendly team a call on (023) 9229 6296 or visit qualitysolicitors.com/largeandgibson for a free no obligation quotation.