Most listed builders and UK’s second biggest mortgage lender now part of ‘deposit unlock’ scheme for first time buyers

The Home Builders Federation has signed up 17 housebuilders as part of the official launch of its ‘deposit unlock’ scheme designed to help first time buyers on to the housing ladder as the Help to Buy scheme winds down.

This follows the news last month that the UK’s second biggest mortgage lender, the Nationwide, was joining the scheme.

The Home Builders’ Federation, which has set up the scheme, said the 17 participating housebuilders included all the listed volume builders, bar Berkeley and Gleeson, plus a raft of privately-owned firms, with more developers to be added in the coming weeks.

In addition to the likes of Barratt, Taylor Wimpey, Persimmon and Bellway, privately-owned housebuilders to sign up include Bewley, Bloor, Croudace, Davidson, Fairview, Hill, Keepmoat, Miller and Thakeham.

Miller Homes

The scheme, backed by insurance firm Gallagher Re., works by getting the developers to fund a mortgage indemnity guarantee on loans to first time buyers at high loan to value ratios.

This allows lenders to offer mortgages at much higher loan to value ratios than they would otherwise offer.

The move comes after the government’s Help to Buy scheme was reined in in March this year, with housebuilders reporting far fewer sales using the government-backed equity loan scheme. The UK’s largest builder Barratt said last month that since the government restricted the use of Help to Buy to first time buyers and introduced regional price caps, the proportion of sales via Help to Buy had dropped from 51% to 21%.

Help to Buy is due to end entirely in 2023.

While the government has itself launched a mortgage indemnity guarantee scheme, lenders have said they will not apply it to new build housing.

The HBF’s deposit unlock scheme has been being offered by a small number of lenders over the last few months, after having been initially trialled by the Newcastle Building Society in the North east.

Andy Dean, head of new build at Nationwide Building Society, said: “Raising a deposit continues to remain one of the biggest challenges facing those looking to move into their first home or on to their next.

“That is why we are pleased to be supporting Deposit Unlock and it’s great to see that it is now being rolled out nationally, providing a real boost to the new build sector.”

Stewart Baseley, executive chairman of HBF said: “Too many people are unable to realise their ambition of home ownership because they simply can’t afford the deposit required. The industry has worked hard to develop a sustainable solution that will help more prospective buyers onto the housing ladder, maintain demand and so enable builders deliver more desperately needed homes.”