Jan
25
What is the government doing to help the UK housing market?
January 25, 2012 | Leave a Comment
A new year usually brings with it a fresh start and the chance to look forward to the year ahead. With the UK economy still struggling, and the government making some unpopular cuts however, it is hard for the average UK citizen to feel like we have much to look forward to in the coming months.
As always in a recession, the UK housing market has been hit hard with prices falling and the number of home movers able to borrow funding being significantly reduced. So what are the government doing to help the housing market get back on its feet?
A fall of anything between 3% and 10% has been predicted for UK house prices in 2012, by a variety of experts, researchers and commentators on the housing market. Although in theory this will make housing more affordable, many UK professionals are worried about moving home because of the current lack of job security. Some of the largest national companies including the banks have made large amounts of redundancies recently. On top of this stamp duty and taxes are high making a move all the more expensive. It’s no wonder home movers are looking to cut down on estate agents fees by selling their house through online estate agents like www.housesimple.co.uk rather than opting for traditional high street agents.
Naturally the consumers will play a large part in how the market fares in 2012, but the way the government reacts will have the largest effect. Banks and building societies and other mortgage lenders are being encouraged to offer better deals for first time buyers including lower deposit requirements. Many young professionals could afford to pay back a monthly mortgage payment, but can’t raise enough capital in savings for the large deposits that are currently expected.
The government now supports a new build indemnity scheme. The scheme allows commercial lenders and home builders to take part in the scheme, and the majority of major lenders and property development companies have already joined. The government is guaranteeing 100,000 high loan-to-value mortgages for home-movers and first time buyers, and will pay out to the lenders if there is any shortfall in mortgage payments following repossession.
There is however a cap on the value of the type of properties that can be included in the scheme. This is good news for the housing market because it encourages slightly more building of new homes, and good news for the public because it will make buying a new home more affordable.