NewBuy: Wales home purchase help scheme abandoned

NewBuy would have been for everyone buying new property worth up to £250,000 with a 5% deposit

A flagship scheme to help homebuyers in Wales has been scrapped only weeks before it was due to start.

Welsh government ministers say the housing industry has withdrawn support after similar, but separate, plans were announced by the UK government.

NewBuy would have enabled buyers to have high loan-to-value mortgages and supported the building of 3,000 homes.

Housing Minister Carl Sargeant said a UK government scheme involved less financial risk for housebuilders.

NewBuy had been promoted as a "major boost to the construction industry" in Wales promising "a positive impact on the housing market".

It had been due to start on 3 June, and would have been open to everyone buying new build houses or flats worth up to £250,000 with a 5% deposit.

But Mr Sargeant told a committee of AMs he was given no advance notice of the UK scheme, Help to Buy, which had "pulled the carpet away" from his plans. He said he was left with no choice but to scrap them.

Liberal Democrats said the Welsh government had "dragged their heels" on the proposals and pointed out that Help to Buy was not due to start until next year.

Mr Sargeant said he would "look very carefully" at what help could be introduced for Welsh homebuyers between now and then.

A Welsh government adviser on housing, Tamsin Stirling, warned that ministers were struggling to get details from the UK Treasury on exactly how the Help to Buy scheme would apply in Wales.

She said part of Help to Buy, offering a mortgage guarantee to make more home loans more available for people with small deposits, was to be made available in Wales.

But Ms Stirling added that a second element, where the UK government would provide a loan of up to 20% of the equity, repayable once a home was sold, was for England only.

Property ladder

She said Welsh government officials were considering if a similar equity scheme could also be introduced in Wales.

NewBuy was agreed as part of deal with the Liberal Democrats to get the Welsh government's 2011-12 budget approved in the Senedd.

Lib Dem AM Peter Black said ministers had "left first-time buyers with no way forward to get on the housing ladder".

"Time and time again the Welsh Labour government delayed the introduction of this scheme," he said.

"Now, due to the failings of this Welsh Labour government, the scheme has collapsed.

"This incompetence is intolerable."

Conservative AM Mark Isherwood said: "While homebuyers in England and Scotland benefit from initiatives launched last year, it is people in Wales who will again pay the price of Labour failure.

"Potential homebuyers looking to get on the property ladder deserve far better - and the first minister should personally apologise to all those he'll let down if this scheme is pulled."

Plaid Cymru said the Welsh government announcement was "very disappointing".

Housing spokesperson Rhodri Glyn Thomas said: "It's high time that it finally took action that can help prospective homebuyers in Wales.

"Helping people on to the property ladder gives people capital security and is vitally important for economic growth."