£400m and mortgage indemnity scheme to boost home building
Ministers have announced plans to boost the construction industry and help people to buy a new home.
The two key measures are a £400m ‘GetBritainBuilding’ fund and a scheme in which the Government will provide indemnity for mortgages of up to 95% of the value of new houses.
The Prime Minister, David Cameron, described the twin strategy as “radical and unashamedly ambitious”.
The indemnity scheme will be launched next Spring and is expected to help 100,000 new buyers get on the property ladder. It will ensure the provision of 95% loan to value mortgages for new build properties.
A Government statement said: “Under the scheme house builders will deposit 3.5% of the sale price in an indemnity fund for each home sold through the scheme for seven years. Interest is payable on the money.
“The Government will provide a guarantee of 5.5% of the property value that can be called on if any losses by defaulting buyers exceed the developer's 3.5%.”
TheGetBritainBuildingfund will provide £400m of development finance to enable builders to restart projects that have planning permission but have stalled due to cash flow problems.
There are currently 133,000 partially built houses that have not progressed over the last year. The Government is publishing a prospectus outlining the details of the scheme and inviting bids from developers.
Please contact Eugene Pritchard if you would like to discuss any residential property issues.