U.K. Chancellor of the Exchequer George Osborne said the government will commit 3.5 billion pounds ($5.3 billion) to help new home buyers by offering and guaranteeing loans.
The government will provide an equity loan of up to 20 percent of the value of a newly built home under the “Help to Buy” program announced by Osborne in his annual budget report to lawmakers today.
“Help to Buy is a dramatic intervention to get our housing market moving,” Osborne said in the House of Commons. “For newly built housing, government will put up a fifth of the cost, and for anyone who can afford a mortgage but can’t afford a big deposit, our mortgage guarantee will help you buy your own home.”
Prime Minister David Cameron is using homebuilding to help stimulate the economy, which is at risk of entering an unprecedented triple-dip recession. The Bank of England’s Funding for Lending Scheme has eased conditions in the home-loan market and the government has also tried to bolster the housing industry by simplifying planning laws.
A potential buyer would have to make a down payment of 5 percent to get the government loan, which is interest free for five years and will be offered starting in April, Osborne said. Loans will be made available to buyers of new homes valued under 600,000 pounds, he said.
The new program broadens an existing one beyond first-time buyers and those who make less than 60,000 pounds a year.