The scheme will be trialled using a handful of new build properties in Epping Gate, Essex and Hayes, west London. But Chris Hood, of Fairview New Homes, said the developer was expecting more availability later in the year. First-time buyers, he said, were particularly drawn to new builds because of their energy efficiency.
He said: “Help to Buy helped tackle affordability and deficit effectively, and after it was withdrawn we found people were struggling – and their affordability was also stretched.”
Fairview’s scheme will see prospective homeowners pay a monthly fee set based on the house’s value and their own personal finances, Mr Hood said. A first-time buyer making a monthly payment of £1,500 would save £18,000 over a year towards a deposit, although buyers can pay more if they choose.
The maximum term a buyer can make use of the scheme is two years. A buyer must be in full-time employment and have minimum savings of 1pc of the value of the house.
Fairview New Homes said the buyer will own 100pc of the home once they have completed, and the developer will have no share in the property. The scheme will run until the end of the year.
The Government’s mortgage guarantee scheme underwrites banks who offer 95pc mortgages, meaning they only need a 5pc deposit. First-time buyers also do not have to pay stamp duty on homes costing less than £425,000, while those with a Lifetime Isa can receive a 25pc top-up worth up to £1,000 a year.
Emma Fildes, of buying agent Brick Weaver, said: “All the big developers are seeing their profits go down as they know no one is really buying at the moment.
“This scheme could be an interesting alternative – and if it doesn’t work it would be rent you’d be paying anyway as it’s not like shared ownership or Help to Buy.”
But Ms Fildes said affordability would likely still be an issue for first-time buyers as mortgage rates are still high.
Mr Hood claimed the scheme could bring forward homeownership for first-time buyers by six years based on how long it would take for them to save for a deposit, reducing the need for parents to support their children while they save.
He said: “We know over a third of parents feel unable to help with financial support for a deposit, and we want to help empower first-time buyers to take that leap of independence while giving them the breathing space to save their own deposit. ”