John Prescott, former Deputy Prime Minister, had promised to help reduce the cost of homes for first-time homebuyers with homes that were to cost £60,000. Unfortunately, here it is 7 years later and that plan has not only fallen flat, it never came to fruition in several markets.
When Prescott made his speech in 2004 to the Labour Party Conference, he noted that the £220,000 price of the average home was not only tripled since he came into power (1997) but had also priced young, first-time homebuyers out of the market. He resolved to take action to help them with affordable housing.
In the end, homes which were intended to cost at or near that £60,000 mark actually ended up costing £225,000 and after homebuyers in Oxely Woods found that homes were only valued at £210,000, the listing prices were reduced accordingly. Unfortunately, not in time to save previous homebuyers that extra £15,000.
Not only did the plan for affordable housing fail, the actual cost was no different than buying a home prior to government intervention. Just because those homes could be built for £60,000 did nothing for the fact that they were listed for four times their cost. That was never the intention of setting up this first-time buyer scheme and it failed miserably.
At the moment there is a new programme underway which was recently announced by Chancellor George Osborne. This is called FirstBuy and it is government’s effort to work with builders by providing £250m in order to provide help for up to 10,000 first time buyers. These funds are meant to help raise the necessary deposits required for purchasing homes.
Even so, many critics are saying that this will only help less than 1% of households in the UK, and not nearly enough to make an impact on those needing financial assistance to purchase homes.
