In a week when it was announced that the average price for diesel fuel had tipped over the £2 per litre mark and filling the average car tank had gone over £110, it's easy to see where some of the problems affecting affordability have come from.
The cost of transporting goods has, by necessity, increased, which then has an impact on the prices of goods at shops, whittling away whatever disposable income you might have left over after paying the normal household bills such as the monthly mortgage payments and utility bills.
Add to this the recent extreme weather conditions affecting crop harvests and the quality of the food produced, and household budgets are under further pressure. This means that potential plans to buy a home shift further into the recesses of the mind until things improve and you can look at the possibility once more.
Why first-time buyers are finding it harder
First-time buyers have an even harder time than most other homebuyers as they try to get on the property ladder. This is in part because of the affordability crisis, but also because of the increase in rental costs diminishing the ability to save the deposit that most mortgage lenders require. And, of course, house price inflation has consistently exceeded the rise in annual income, ensuring that the housing supply available to this group dwindles as time passes. Unlike anyone selling a home to put towards buying the next one, the equity simply isn't there for first-time buyers.
The housing market is an important indicator of the health of the general economy so, to help this group of potential buyers, the Government has regularly come up with a variety of first-time buyer schemes, from reducing the financial load of paying stamp duty (or land transaction tax in Wales), to the provision of loan assistance and making the market price essentially cheaper.
What is the Your First Home scheme?
The Labour Party Conference has been taking place in Liverpool this week and, ahead of it, the Government announced the creation of the Your First Home scheme, which will be fleshed out and ratified financially in the upcoming Autumn Budget.
According to the press release issued by the Ministry of Housing, Communities and Local Government (MHCLG) on 26 September, the Your First Home scheme is a new equity loan scheme, which is expected to support 2.5% deposits with a Government-backed 20% equity loan: that is, where the Government provides a loan and takes a percentage share in the home.
Specifically, the information provided notes that this scheme is only for the purchase of a new-build property from a developer who has signed up to the Your First Home scheme. The equity loan will also be initially free of interest, meaning that first-time buyers taking advantage of the scheme could save hundreds of pounds a month when compared against, say, a standard 95% mortgage.
Who will be able to use it?
However, the scheme will not be open to every first-time buyer, says MHCLG, with caps being placed on household income for eligibility, while local caps on prices might be applied to the eligible new-build properties. The scheme will only be available to applicants buying a home in England.
How the scheme will be funded
Signed-up builders will also be expected to contribute to the costs. The details have not yet been provided, but the Government confirms that how the scheme is to be financially supported will be set out in the Chancellor's Autumn Budget on 28 October.
The scheme, says MHCLG, recognises the challenges for both the first-time buyer and the construction industry, which has been impacted by rising costs for building materials and the pressures coming from international geopolitics. At the same time, it will also provide the stimulus for the first-time buyer who has all but given up hope of ever owning their own home.
Get your conveyancing moving
However (and wherever) you are approaching your property project, and especially if you are a first-time buyer, you'll need effective and focused representation so the legal side of things is handled quickly and efficiently. Our conveyancers at Homeward Legal will start work on your plans as soon as you agree to the quotation and appoint them to represent you.
Call us on to get your conveyancing quote started or to discuss your plans to move. Alternatively, get a quick conveyancing quote online.