Date published: 22/06/2011
Nearly half of first time buyers have never heard of ‘shared equity’, a study by Miller Homes has revealed. The news comes on the day that the Government announced its funding allocation for its new equity loan scheme, FirstBuy - which will replace the previous Government’s shared equity scheme, HomeBuy Direct.
Only 12 per cent of first time buyers polled by Miller Homes could correctly explain what shared equity was (despite nearly 50% claiming they knew), over 60% confusing it with shared ownership – where people part buy, part rent their home.
The term “shared equity” was recently reviewed by the government and replaced with equity loans earlier this year. However, the survey by Miller Homes, suggests there is still a lot of work to do to educate the public if Firstbuy is to help enough buyers onto the property ladder as it is rolled out across the UK later this year.
In fact, 37 per cent of the first time buyers polled admitted that their lack of understanding would put them off using an equity loan completely.
In stark contrast, 94 per cent of would be buyers said that they didn’t have enough deposit to buy their first home and needed help.
In the same survey, nearly 53 per cent of new buyers said that they were unable to purchase as they haven’t got enough for a deposit and 30 per cent couldn’t get a big enough mortgage – both issues that FirstBuy aims to address for new buyers.
88 per cent of first time buyers also said they didn’t think that enough was been done to help them despite the previous Government ploughing £millions into Firstbuy’s predecessor – Homebuy Direct, which has helped thousands of people purchase in the UK.
Chris Endsor, Chief Executive of Miller Homes, said: “A massive education exercise is required to help explain the virtues of schemes like FirstBuy to the people they are targeted at.
“Since the availability of high loan-to-value mortgages following the credit crunch reduced considerably, first time buyers have felt the pinch but the truth is that they are still missing a trick when it comes to equity loans. In most cases, it is the lifeline they are looking for, particularly as recent reports claim that the majority of adults have given up ever being able to afford their own home altogether.
“We need to make sure that first time buyers know that this product gives them access to better mortgage rates and lower monthly payments and that it is a truly effective way of purchasing a new home.”
Miller Homes have been granted FirstBuy funding, which will open the door to hundreds of buyers across the UK to take advantage of the scheme.
Chris continued: “It is fantastic news for potential customers of ours and following the huge success of HomeBuy Direct, we look forward to driving home the availability of this product to help first time buyers.”
The poll hailed some food for thought for parents though, as 63 per cent of new buyers plan to ask a family member for help with their deposit. Just seven per cent plan to use developer incentives to help them onto the ladder.
Chris commented: “Parents will always be called upon to help their children find the money for their first deposit, which is why we have launched a brand new scheme to help reward those family members who offer support with deposits. MiFamily Deposit incentivises parents and other family members by offering them the equivalent of five per cent interest over five years, which is paid to them in a lump sum once the purchaser completes.” *
1,500 first time buyers were polled in the survey by the nation’s largest privately owned housebuilder, Miller Homes.
*Available on selected developments and plots. Terms and conditions apply.
Name: Amy O'Toole
Phone: 0121 456 3004