13,000 New Homes
Builders will begin working on the 13,000 homes in Dover, Cambridgeshire, Chichester and North West London this year, with 40% of them being ‘starter homes’.
The £1.2bn Starter Homes scheme has been spoken about since this time last year, with the government setting its own target of building 200,000 of them by 2020, and has been designed to help combat the severe lack of properties that continues to drive prices up, thus helping first-time buyers get onto the property ladder.
The average price a first-time buyer will pay for a property is £202,765; with the Starter Homes discount, this would be reduced to £162,212.
With many lenders offering 95% mortgages outside of Help to Buy to increase competition, when Help to Buy ends in 2020, there is a chance that lenders may also retract their 95% and 90% mortgages.
This could mean that a Starter Homes property worth the average £162,212 could require a first-time buyer deposit of £24,331 (85% loan-to-value) – a substantial amount.
It is expected that Help to Buy mortgages will be able to be taken out on Starter Homes properties which would bring that deposit right down to £8,110.
The question that this raises is; does the government have a plan in action for when Help to Buy ends? Without one, they could risk pushing the first-time buyer market back into decline.