Irwin Mitchell Highlights NewBuy Scheme Not Just For First Time Buyers
Leading conveyancing specialists have warned that not enough people are taking advantage of the government-backed NewBuy scheme to help them get on or move up the property ladder, as research reveals that buying could now be cheaper than renting.
Irwin Mitchell is urging prospective tenants to do their research before moving into rented accommodation, as they may wrongly assume that schemes designed to boost the property market are only aimed at first-time buyers.
The call has come after new figures* revealed that private rents in England and Wales rose for the fifth consecutive month in August, with the typical average monthly rent reaching £734.
In addition, further research released days earlier** suggested that the monthly costs associated with buying a home are now 18 per cent cheaper than renting. In the past 12 months, buying costs were found to have fallen three per cent, with the cost of renting up five per cent.
Conveyancing experts at Irwin Mitchell believe that these findings are a clear sign that buying should not be ruled out completely, but revealed concerns that people may be simply unaware of the potential options open to them.
Eve Lake, a specialist in conveyancing at the national law firm, said: “While the property market remains in a difficult spot, these new findings show that turning to renting may not necessarily be a better option for those looking to move.
“Research has shown that the cost of renting is becoming more and more expensive, while this is not an issue which is exclusive to markets in traditionally busy regions such as London and the South East.
“We would urge the public to carefully examine the state of play in the areas they are keen to relocate to, comparing the potential costs that they may face as a tenant or as an outright owner.
“One potential option for those unable to save for a large deposit could be to consider government-supported developments in such locations, but we have concerns that many tenants may be simply unaware of such options and how they could benefit from them.”
The NewBuy initiative was introduced in March this year by the Government and homebuilders. Aimed towards people who only have a 5-10% deposit, mortgage lenders have joined forces with developers to provide 90-95% loan-to-value mortgage for buyers.
Open to first-time buyers and existing homeowners, it is available on properties in England by the participating home builders on properties with a purchase price of up to and including £500,000.
Eve outlined: “The aim of the NewBuy scheme is to ultimately provide a timely boost to the property market and also help people who are keen to make a move on to or up the property ladder.
“More than 20 developers are signed up to the scheme so many people may find that eligible developments are in and around the areas they are looking at moving to.
“With conditions in the rental market looking increasingly costly, schemes such as NewBuy and similar initiatives solely operated by housebuilders could not only get people buying but also help to give the market a welcome push in the right direction.”
*LSL Property Services statistics for August 2012
**Halifax research, Sept 2012