A new scheme Help to Buy goes further than the existing FirstBuy initiative in providing shared equity loans for homebuyers, while a new mortgage guarantee is designed to dramatically increase mortgage availability.
The Federation of Master Builders (FMB) welcomed the help with home loans but questioned whether there was sufficient support for smaller builders. The Construction Products Association described the measures as a possible "game-changer".
Help to Buy, starting in April, will cover £3.5bn of shared equity loans over the next three years up to 20% of the value of a newly-built home. Crucially, it will be available on newly-built home purchases up to £600,000 and buyers on any income (previously a £60,000 family income cap).
This would cover 90% of newly-built houses in the UK.
The new mortgage guarantee, starting in 2014 and running for three years, will support £130bn of mortgages and effectively sees the government underwrite mortgages where people can’t afford the deposit.
The chancellor said it was a “great deal” for homebuyers and a great support for housebuilders.
The FMB said the measures could provide a boost to all firms involved in housebuilding, renovation and repair. “But changes to the FirstBuy scheme will be of limited assistance if it remains too costly and complex for smaller developers, who deliver a third of all new homes,” he said.
"We are encouraged that Government has combined these plans with a catalyst for potential home buyers in the form of the new “Help to Buy” programme, which could be a game-changer," said Dr. Diana Montgomery, chief executive of the Construction Products Association.
"Nevertheless, last year we built only half of the number of homes we need, and the downward revision in economic growth only reinforces the need for these measures to boost construction and the economy."
