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NewBuy Guarantee Scheme – Details Unveiled

On 1 February 2012, Grant Schapps, Minister for Housing and Local Government, provided an update to the government’s housing strategy.

The NewBuy scheme is intended to help buyers, who have at least a 5% deposit, buy a new build property in England.

Under the scheme, lenders are able to offer low-deposit mortgages without bearing all of the risk. If the property drops into negative equity and the property is repossessed, the government and the developer who built the property will bear some of the risk.

The scheme should be available from March 2012 and the key details have been revealed as follows:

  • The scheme is only available to purchasers of new build houses or flats, priced up to £500,000
  • The scheme is only open to those purchasing their principal home. (Purchasers who acquire a property as a second home or buy-to-let investment will not be able to take part in the scheme)
  • Purchasers may be first time buyers or those already on the property ladder
  • Eligible purchasers must be U.K. citizens or have indefinite rights to remain in the UK
  • The scheme is not available for shared ownership or shared equity purchases

The NewBuy Guarantee Scheme is a central part of the government’s housing policy. The government hopes that the scheme will ‘kick start’ the property market and aid economic recovery. However, critics have suggested that with only 100,000 places available through the scheme, many potential purchasers will still be unable to get on to the property ladder.

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Dated: 15/02/2012

Author: Greg Cox

NewBuy Guarantee Scheme

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