The RICS is today calling for a taxpayer-backed NewBuy type of mortgage scheme to be made available for first-time buyers of secondhand properties.
It says that currently first-time buyers are trying to get on to a housing ladder that has no rungs.
It says that such a scheme could either lend or guarantee first-time buyers ‘a reasonable deposit’ in return for a stake in their homes.
The RICS says that this would free up stagnant chains, give first-time buyers access to the market, and provide the Government and taxpayer with ‘a clear return on investment’.
The organisation says that currently, 38% of potential buyers are trapped in rental accommodation as they cannot afford to access the property market. The RICS also says that one in five people who do try to buy are seeing their purchases fall through, due to difficulties with mortgage finance.
The NewBuy scheme offers purchasers – not just first-time buyers – 95% mortgages, with lenders being given indemnities, backed jointly by developers and taxpayers, to cover their losses if the property has to be repossessed and falls into negative equity.
The scheme covers new-build purchases of up to £500,000, but has come under fire for its high rates.
Peter Bolton King, RICS global residential director, said: “Many first-time buyers are facing the prospect of a property ladder with no rungs.
“With lenders requiring such hefty deposits and affordable mortgage deals out of reach for most, a generation of potential home owners are facing an uphill struggle.
“The RICS would like the Government to consider a mortgage indemnity scheme that works for the whole market, not just new-build. NewBuy could potentially lead to market distortion by reducing demand for secondhand property.
“Without allowing first-time buyers greater access to the second hand market, chains and transaction levels will continue to stagnate.”
Source: www.estateagenttoday.co.uk 25th July 2012