Wales drops NewBuy Scheme weeks before it starts

Wales drops NewBuy Scheme weeks before it starts

With its introduction fast approaching, prospective homeowners in Wales were understandably shocked when the government’s NewBuy scheme was unceremoniously scrapped. The purpose of this previously high-profile scheme was two-fold: initially to support potential purchasers with high loan-to-value mortgages and eventually to reinvigorate the stagnating building industry in the area.

NewBuy had promised much to many people and in particular to first time buyers. Those struggling to enter the property market will be well aware that raising the money for a deposit of 10% or more is one of the hardest aspects of house buying. The NewBuy scheme would have required only a 5% deposit to secure a nominated new-build home up to a value of £250,000.

According to Welsh ministers, builders in Wales suffered cold feet when the UK government introduced plans for a seemingly similar system known as ‘Help to Buy’. Concerned that the UK scheme – which carries far less of a monetary risk for building companies – would usurp their own, housing ministers felt forced to scrap the idea completely.

Welsh ministers have been quick to defend their apparently rash decision, laying the blame at Westminster’s door with the suggestion that they were entirely unaware of any like-for-like schemes on the horizon. Yet the Liberal Democrats contradict this and argue that the two schemes, scheduled to start a year apart, could have co-existed if the Welsh government had delivered NewBuy when it was initially proposed.

The Help to Buy scheme is open to all, including first time buyers. It has an upper limit of £600,000 in terms of property value. Rather than assisting with the deposit, the Help to Buy initiative can potentially provide buyers with 20% of the equity needed to secure a home. However, Welsh ministers are still apparently unsure of the permutations and availability of the UK scheme in Wales itself.

At present, they are said to be looking “very carefully” at what can be done to fill NewBuy’s void. But in the meantime, many hopeful first time buyers remain a frustrating distance from that first rung on the property ladder.

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