Newbuy Statistics

Graham_Devon

Dunno if these statistics are good or not, but stumbled across them when reading of the proposals to extend newbuy to second steppers.

Basically, the headline figures are (up to 31st Dec 2012), since March 2012:

- 1,522 homes have been sold using the newbuy scheme.

- Taxpayer liability stands at £15.4m

- Incurred liabilities stand at £0.

- The scheme aims to help 27,000 people by April 2014.

- 25,000 additional new homes were supposed to be built under this scheme. (Edit: it seems this in itself has been revised from the initial 100,000 new homes stated in Nov 11 when the scheme was annouced! That's quite some revision!!)

The average uptake per month therefore needs to be around 1,100 homes each month. It's falling short by 85% so far each month.

And this is the next new thing which is being tinkered with to help the housing market....

grizzly1911

Graham_Devon wrote: »

Dunno if these statistics are good or not, but stumbled across them when reading of the proposals to extend newbuy to second steppers.

Basically, the headline figures are (up to 31st Dec 2012), since March 2012:

- 1,522 homes have been sold using the newbuy scheme.

- Taxpayer liability stands at £15.4m

- Incurred liabilities stand at £0.

- The scheme aims to help 27,000 people by April 2014.

- 25,000 additional new homes were supposed to be built under this scheme.

The average uptake per month therefore needs to be around 1,100 homes each month. It's falling short by 85% so far each month.

And this is the next new thing which is being tinkered with to help the housing market....

Destined to fail when announced.

It is a sop to keep the Builders quiet.

Complete the ones in train and pull the plug. Get on with a real solution.

HAMISH_MCTAVISH

Graham_Devon wrote: »

- 25,000 additional new homes were supposed to be built under this scheme. (Edit: it seems this in itself has been revised from the initial 100,000 new homes stated in Nov 11 when the scheme was annouced! That's quite some revision!!)

The average uptake per month therefore needs to be around 1,100 homes each month. It's falling short by 85% so far each month.

Not much of a "prop" then Graham, is it?

More a "toothpick"....

wymondham

So to date this has cost the taxpayer £15.4m ??

if that's so then I don't appreciate being forced to fund someone else's choice in purchasing a currently overpriced 'asset' - do I get a cut when they sell in the future?

HAMISH_MCTAVISH

wymondham wrote: »

So to date this has cost the taxpayer £15.4m ??

Nope.

To date this has cost the taxpayer zero.

wymondham

HAMISH_MCTAVISH wrote: »

Nope.

To date this has cost the taxpayer zero.

so how does the £15.4m come in on this?

Graham_Devon

wymondham wrote: »

so how does the £15.4m come in on this?

It's the total liability we have on these mortgages. So if every buyer defaulted, that would be the cost to the taxpayer.

This is instead of the cost being born by the banks. The idea is they will then lend to higher risks as they are not on the hook, the taxpayer is.

CLAPTON

wymondham wrote: »

so how does the £15.4m come in on this?

The £15.4m is the taxpayer liability should all the buyers default; fairly unlikely

Graham_Devon

CLAPTON wrote: »

The £15.4m is the taxpayer liability should all the buyers default; fairly unlikely

Yes, unlikely that the total liability will be spent.

However, it's more likely in these cases that the liability will need to be tapped into.

Sole reason is that it's all on new build properties. Therefore this is instant negative equity, regardless of the housing market. So it's more likely that newbuy mortgages will see negative equity issues, especially when it comes to moving and interest rates increasing, over a normal purchase.

By definition, these people are strecthed, as they can't afford a "normal" mortgage, again, causing increased liabilities. Putting strecthed people and instant negative equity together will increase the chances of problems down the line.

Liability of £15m doesn't sound much, but extend this to the 27,000 target by April 2014, based on existing figures, the liability quickly moves to £2.7bn

ukcarper

With default rate at 0.8% that £15m comes down to £120k assuming they recover nothing. Shouldn't your £2.7billion be £270million

AlexMac

Agreed that as a Government strategy, its a pinprick. If the politicians wanted to encourage more housing, they'd have to do something real- but they don't (do or want to). No surprise that there were under 130,000 new housing starts in England in the year 2011-12 (of which over 80% were by private builders compared with under 20% by public bodies- Councils or Housing associations). Compare that with the peak in the 1960's, when three times as many homes were built- over 425,000, almost half of them by public authorities; so almost ten times more council or HA homes and three times more private houses than last year http://www.lloydsbankinggroup.com/media/pdfs/research/2010/50_Years_of_Housing_UK.pdf

Some of this may simply reflect the market, but those of us who lived through it - the post-war 'baby-boomers' - didn't realise how lucky we were; for the Council homes we and our parents lived in, and then, for the massive government cash incentives to owner occupiers. In my own case, as I said in another recent post, these included -
- 100% mortgages from the then Greater London Council in the 1970's (remember the GLC?)
- home improvement grants from the local to restore a wreck bought for £10k in a dodgy street in Brixton - a chunk of cash towards a new roof and central heating (that house is now worth £750k according to Zoopla!)
- 'Mortgage Interest Tax Relief' which in my case, in a period of high inflation and 10-15% interest saved me a sum equivalent to 30% of the then purchase price over 7 years.

OK so I'm maybe a bit rose-tinted in my memories - but these added up to a lot more than the £1k per result approach criticised by the OP.

So maybe they should apply a mansion tax after all- to anyone born before 1960!