The scheme, which opened yesterday, allows young first time buyers to register for new Starter Homes with 20% off the asking price.
New rules have cut planning requirements for the new Starter Homes, allowing house builders to slash 20% off the usual price, with building on the first homes expected to start within months.
Communities Secretary Eric Pickles said:
"Housebuilding and helping first-time buyers are key parts of our long-term economic plan – we’re clear that anyone who works hard and wants to get on the property ladder should get the help they need to do so.
"The number of first-time buyers is already at a seven-year high and these Starter Homes, available at a 20 per cent discount, will help even more people realise their dream of home ownership.
"This will also form part of our wider efforts to get the country building again, which have already led to 700,000 new homes being delivered since the end of 2009."
However Andy Frankish commented:
“Although it is still very much in its infancy, the Starter Home Scheme promises to be another popular option for first-time buyers. However, questions surrounding eligibility remain unanswered: it has not yet been revealed whether there will be additional restrictions on top of the 40 year age cap. Crucially, there has been no mention of maximum loan-to-values: for this scheme to be successful or even to compete with Help to Buy, 95% mortgage lending must be available.
“However, many lenders could be put off from offering this if they are not able to sell at full market value for five years, which is problematic in a repossession scenario. The general lack of lender and broker involvement in the early stages of this scheme could also prevent it from having a flying start: little is known about its mechanics so it may be a while before widespread lender support is obtained. Without a good lender mix, the scheme could quickly lose momentum, and if the sites are all brownfield developments surveyors will need to be certain property will hold value.
“It is always positive to see that government is committed towards new housing options, but it is also worth remembering only 100,000 first-time buyers will benefit from this scheme: a drop in the ocean compared to the current housing crisis. Although no short-term solutions exist, we need more cohesive cross-party thinking to really make a difference to the shortfall in the number of new homes available on the market.”
