Hoping to take advantage of the Government’s Starter Home scheme? You may want to consider other initiatives.

The Government has failed to build any of its promised Starter Homes despite spending nearly £200 million on the initiative.

In 2014, it announced plans to create 200,000 new properties which would be sold to first-time buyers at a 20% discount.

But five years later, a single property has yet to be built as part of the scheme, despite the Ministry of Housing, Communities and Local Government spending nearly £174 million acquiring and preparing land for the homes, according to the National Audit Office (NAO).

Instead the land has all been used for general housing, with only some of the properties classed as being ‘affordable’ homes.

The report said: “No Starter Homes have been built to date. The Starter Homes legislative provisions are not yet in force. The Department no longer has a budget dedicated to the delivery of Starter Homes.”

Why is this happening?

Despite former Prime Minister David Cameron including the scheme in the Conservative Party’s 2015 election manifesto, the legislation backing Starter Homes was never passed.

As a result, even new homes that conformed to the specifications of the initiative could not be marketed as Starter Homes and housebuilders were not able to back the scheme.

The NAO also pointed out that although £2.3 billion was originally set aside for the first 60,000 properties to be built under the initiative, the Government no longer had a budget set aside for Starter Homes.

New build house in Bristol

Who does it affect?

The failure of the Starter Home scheme is disappointing news for first-time buyers who had hoped to take advantage of it.

Unlike some initiatives, the Starter Homes scheme was only going to be available to people aged under 40 taking their first step on the property ladder.

While the Help to Buy scheme, which helps people buy a home with only 5% of the property’s value to put down, offered assistance to people who were struggling to save a deposit, Starter Homes would have tackled the issue of affordability, by offering properties at a 20% discount to their market value.

What’s the background?

While Starter Homes may have failed to get off the ground there are a number of other government initiatives that first-time buyer can use to get on to the property ladder.

Under the Help to Buy scheme people can purchase a property with just a 5% deposit, with the Government topping this up with a 20% equity loan – rising to 40% in London, which is interest-free for five years.

And until the end of this month, first-time buyers can also take advantage of the Help to Buy ISA, under which for every £200 you save towards a housing deposit, the Government will add £50 up to a maximum of £3,000, although the money is only available on competition.

Other schemes include Shared Ownership, which enables people to buy a portion of their home and rent the rest, while first-time buyers are also exempt from stamp duty on the first £300,000 of a property purchase in England.

Top 3 takeaways

  • The Government has failed to build any of its 200,000 Starter Homes since making the pledge five years ago

  • It has spent £174 million acquiring and preparing land for the homes

  • The Ministry of Housing, Communities and Local Government no longer has a budget for the initiative

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