NewBuy 'is not ideal for FTBs'
First-time buyers (FTBs) may not be best served by taking part in the government's ongoing NewBuy initiative, a sector expert has stated.
Paul Holmes, managing director of Firstrung, said enabling more young people and FTBs to take their first steps on to the housing ladder is to be applauded, but NewBuy may not be the right choice for many people.
Indeed, buyers are urged to examine the small print of any NewBuy scheme before signing any contract and to question who really is benefitting from this type of deal.
He commented: "To simply solve the problem of 'FTBs haven't got enough profit, how do we get around that?' and then lump them with a long-term debt that they may never recover from, is not really a solution in my opinion."
Indeed, shared ownership schemes could be a much safer option for FTBs, as this means should property values fall over the coming years, both the property owner and the developer take a hit, rather than just the buyer.
However, in the present economic environment many developers are unwilling to open themselves to this form of risk.
Furthermore, shared ownership schemes enable Brits the option to purchase a greater equity in their home as time goes by, meaning should they find their financial situation improving they can still buy the remainder of their home.
Mr Holmes' comments follow the recent publication of data from the Home Builders Federation highlighting the impressive start to the year that NewBuy has so far enjoyed.
According to the organisation's data, NewBuy has seen more than 3,000 Brits sign up in just the first three weeks of 2013.
Stewart Baseley, executive chairman of HBF, commented: "We know that there is a huge pent up demand for home ownership after years when large deposit requirements have prevented many people from buying their first home."
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