Osborne's 'dramatic intervention' will help boost housing market in Devon and Cornwall
Chancellor George Osborne yesterday offered hope to struggling homebuyers in Devon and Cornwall amid a grim Budget underlining the ailing condition of the British economy.
First and second-time buyers will need to find a deposit of just 5% to get the chance to move into new-build homes worth up to £600,000, it was revealed.
Families in the South West struggle to get on or move up the property ladder because of an unfavourable ratio of high prices to low wages that is worse only in London.
Buying a house in Cornwall now costs £220,083 – almost 13 times the average local wage. In Devon, it costs £234,610 – again 13 times annual pay in the county.
Business Cards From Only £10.95 Delivered www.myprint-247.co.ukView details
Our heavyweight cards have FREE UV silk coating, FREE next day delivery & VAT included. Choose from 1000's of pre-designed templates or upload your own artwork. Orders dispatched within 24hrs.
Terms: Visit our site for more products: Business Cards, Compliment Slips, Letterheads, Leaflets, Postcards, Posters & much more. All items are free next day delivery. www.myprint-247.co.uk
Contact: 01858 468192
Valid until: Friday, May 31 2013
The Chancellor's Help-to-Buy scheme – a deliberate echo of Margaret Thatcher's council house Right-to-Buy scheme – was part of an "aspiration nation" Budget designed to boost business and ease the burden on working families.
Other eye-catching give-aways in the Budget included taking a penny off the pint to help save community pubs – but cider was excluded.
And by scrapping September's 3p fuel duty rise after a two-year freeze, a driver of a Vauxhall Astra will save £7 every time they fill up, the Chancellor claimed.
Corporation tax was slashed to 20% and the National Insurance allowance raised to boost small business, while the personal tax-free allowance will increase to £10,000.
But the hand-outs provided cover for a disastrous overall picture. Growth forecasts were halved for this year – down from 1.2 per cent to just 0.6 per cent – suggesting the economy is grinding to a halt.
The Chancellor described yesterday's package as a "Budget for people who aspire to work hard and get on".
But he added: "Today, I'm going to level with people about the difficult economic circumstances we still face and the hard decisions required to deal with them."
Labour said it was a "more of the same Budget from a downgraded Chancellor".
Westcountry MPs broadly welcomed the back-to-the-walls statement given the limited room for manoeuvre.
The eye-catching policies – which also included a childcare tax-break and future splurge of roads and building – will be principally paid for by cuts to unprotected Whitehall departments, a tax evasion crackdown and extending a public sector pay freeze.
The Chancellor also boasted the Government had created 1.25 million new jobs and reduced the deficit by a third.
The Help-to-Buy scheme for those struggling to find mortgage deposits will include £3.5 billion for shared equity loans, and a Government interest-free loan worth 20% of the value of a new-build house.
The Chancellor said the scheme will be available to everyone who wants to buy a home from next year.
A new mortgage guarantee, sufficient to support £130 billion of loans, will help people who cannot afford a big deposit.
The Government will also offer interest-free loans for five years for those wanting to buy new-build homes.
The loans will be available to those who can find a 5% deposit, with the loan worth up to 20% of the value of a home worth up to £600,000 and repayable when it is sold.
According to the National Housing Federation, in the South West the standard 25% deposit on an averagely priced home now stands at £55,021 – a figure the average wage-earner would take more than nine years to save.
The principle behind the scheme is two-fold: help struggling buyers to buy a home and in turn get more houses built, fuelling economy-boosting construction jobs.
Neil Parish, Conservative MP for Tiverton and Honiton, said: "If the Conservative Party is not the party of home-owners then what are we?
"Hopefully this should make a house in Devon more affordable."
Stephen Gilbert, Lib Dem MP for St Austell and Newquay, said: "This will directly benefit many families in Cornwall who currently struggle to save the money for a deposit, while battling with soaring house prices. Home ownership should be a reachable aspiration for local families."
Tim Jones, chairman of the Devon and Somerset Local Enterprise Partnership, said: "We're encouraged by the unexpected improvements for home buyers – that's always been one of our great clarion calls because we know how quickly it converts into jobs.
"If you get people on to the housing ladder it improves social mobility and helps the construction industry."
Andrew Berry, managing director of Truro-based Kernow Property Services, said: "For a long time we have seen people struggle to secure mortgages and therefore there has been limited movement in the property market.
"During the past three years we have seen things improve steadily and I believe that the new scheme will help the market recover and gain stability."
Mr Osborne told MPs Help-to-Buy is a "dramatic intervention to get our housing market moving".
He said: "For newly built housing, Government will put up a fifth of the cost. And for anyone who can afford a mortgage but can't afford a big deposit, our Mortgage Guarantee will help you buy your own home."
The idea was welcomed by mortgage lenders and housebuilders, but the Treasury was forced to rebut warnings that it risked fuelling a new property price bubble.
In a 54-minute statement, Mr Osborne said he wanted to send a message that Britain was "open for business", pledging to cut corporation tax to 20% by April 2015 – matching the lowest levels of any G20 country.
But the Budget underscored how the austerity years are poised to continue – with little end in sight and drawing comparisons to Japan's sluggish economy through the 1990s, which was dubbed the "lost decade".
The Chancellor blamed the downturn in the eurozone, currently gripped by a new crisis in Cyprus, which is trying to agree a £17 billion bailout.
He admitted that his target to cut debt as a percentage of GDP will now not fall until 2017/18 – two years later than planned.
Figures from the Office for Budget Responsibility suggest the Government's efforts to cut the deficit – the difference between money spent and earned – have stalled, and it will remain stuck at about £120 billion for three years.
Labour leader Ed Miliband seized on the worsening debt figures calling Mr Osborne a "downgraded Chancellor". He said: "Every Budget he comes to this House and things are worse, not better, for this country. Compared to last year's Budget: growth last year down, growth this year down, growth next year down, growth in 2015 down. All he offers is more of the same."