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Liberal Democrat Leader Tim Farron has warned that there is a major loophole in the Government’s flagship housing project, which could mean that property investors could potentially exploit discounted homes that have been earmarked for first-time buyers.
The Starter Homes programme was announced in 2016, and the aim was to provide a 20% discount to under 40s buying a new home. The Government target is to build 200,000 by 2020.
The loophole exists because there is no requirement in the legislation for the buyer of the Starter Home to reside in the property.
The Liberal Democrats have warned that wealthy parents gift their children the deposit to buy a Starter Home, and then let them out. In addition, there’s nothing to stop an investor pairing with a first-time buyer under the age of 40, helping them to buy a property and sharing in the profits of a sell-on or rental income.
The Department of Communities and Local Government (DCLG) has stated that “Starter Homes will not be buy-to-let properties” and the Government will soon be consulting on the rules of the scheme as part of the Housing and Planning Bill to include letting restrictions on Starter Homes.
There is also a concern that these properties will be sold on at market price, giving buyers the opportunity to make a quick profit and only one generation of first-time buyers will benefit.
The Liberal Democrats believe that plans for Starter Homes are very badly designed and will fail to help the right people, as they will be bought by the sons of millionaires and make them a huge profit and so the scheme is not fit for purpose.
If you are a first-time buyer and under the age of 40, talk to us today to find out how you could get your foot onto the property ladder.
Your home may be repossessed if you do not keep up repayments on your mortgage.
If you would like financial advice please contact Derngate Wealth today.