New build home buyers will be able to purchase property with a five per cent deposit through a new scheme launched this week.
Barratt Developments, Bellway, Keepmoat and Vistry are among the 17 builders across England, Wales and Scotland who have signed up to ‘deposit unlock’. The UK’s second largest lender Nationwide and Newcastle Building Society are involved with more lenders expected to join early next year.
Homes for Scotland chief executive Nicola Barclay said: “The industry has worked hard to develop a sustainable solution that will help more prospective buyers onto the housing ladder and so enable builders to deliver more much-needed homes of all tenures.”
The scheme plugs a lending gap in Scotland as the first home fund offering equity to first-time buyers of up to £25,000 to purchase a home closed last year with the help to buy initiative closing next March.
Insurance for snagging also offered
The Home Builders Federation and Homes for Scotland developed the scheme with the help of larger members which is being run by Gallagher Re. The initiative also includes mortgage indemnity where the developer deposits cash to cover the cost of any potential property defaults.
Nationwide Building Society new build head Andy Dean said: “Raising a deposit continues to remain one of the biggest challenges facing those looking to move into their first home or on to their next. That is why we are pleased to be supporting deposit unlock and it’s great to see that it is now being rolled out nationally, providing a real boost to the new build sector.”
Newcastle Building Society piloted the scheme in the northeast in June for new-build homes up to a value of £330,000 offering a two-year fixed rate at 3.5 per cent. It is seeing the first few completions going through now.
Newcastle Building Society chief customer officer Stuart Miller said: “Deposit unlock is a true innovation and great example of collaboration across the industry to help more people achieve the dream of home ownership.”
Brokers Hank Zarihs Associates said development finance lenders were keen on a scheme that helped new builds sales. The finance brokerage said it hoped the initiative would grow to include smaller housebuilders too.