The UK will charge housebuilders as much as 4% of the sale price on properties bought under the new Your First Home program. Developers taking part in the subsidized scheme for first-time buyers will pay a staggered rate to help fund its running costs.
The rates start at 1% for the first 100 homes sold, rise to 3% on the second band of up to 250 homes, and reach 4% on homes above that, according to the UK government website. The varying rates are intended to help smaller developers take part.
Details of Your First Home were announced in last week's budget. Chancellor of the Exchequer John Healey said the support program would cost about £4.7 billion ($6.3 billion) over five years. The scheme echoes the Conservatives' Help to Buy initiative, which ran for a decade until 2023. Both programs offered equity loans with interest-free portions to make getting on the property ladder easier and to boost the sluggish real estate market.
However, the small size of the new funding relative to Help to Buy disappointed some investors last week, leading property stocks to give up gains they had enjoyed ahead of the budget. The government expects 70,000 buyers to take advantage of the offer, which comes with house price and earnings limits.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing