Private Developers Get Innovative to Keep Their Houses Selling
by Ritchie Mehta (10 February 2009)
In the current climate private property developers are being hit hard. House prices have fallen around 16% in one year according to the Halifax’s House Price Index bringing them down to levels seen last in 2004. In addition, the credit crunch has
caused an extra hurdle for homebuyers, particularly first time buyers.
Some property developers have had to take the tough decision to sell their completed stock at below market value to keep them ticking away. However, in a bid to increase their sales, many developers are trying new innovative ways in which to help first time buyers overcome the hurdles of the credit crunch.
In the current situation although the UK base rate sits at 1.0%, borrowing costs are significantly higher especially for First Time Buyers who do not have a huge deposit. In order to help these people Barratt’s have teamed up with English Partnerships to deliver the First Time Buyer Initiative (FTBI), part of the Department of Communities and Local Government’s Homebuy scheme.
Under the FTBI, an individual takes out a mortgage for 50% of the property while the other 50% is loaned to them by English Partnerships. This alleviates the need to get bank funding for the whole property and enables the individual to purchase a home. In addition to this scheme Barratt’s also offer a whole range of deals such Homebuy Direct and Shared Equity schemes where you do not require a deposit.
Other developers are following suit promoting slightly different offers. Redrow for example, is offering to match any deposit when you buy from a range of selected homes. This means that if you have a £2,500 deposit, they will match that amount. This allows potential first time buyers the chance to get a better rate on their mortgage by offering banks a larger deposit.