Published: 5 June 2013 | Author: Bernard Clarke
Almost 2,300 buyers in England have successfully purchased a home during the first full year of the NewBuy initiative, according to government data. Sales under the scheme are supported by a government guarantee of a maximum of 5.5% of the property’s value. But figures from the Department for Communities and Local Government (DCLG) show that, while the government’s potential liability under the scheme – the maximum possible cost to the state – is £23 million, the actual cost incurred so far by the government is zero.
Data published this week by the DCLG shows that there were just over 750 NewBuy purchases in the first quarter of this year. The scheme was launched in March 2012 and the data shows that there have been 2,291 sales during its first year, with more than 1,650 completed in the last two quarters.
Alongside this week’s numbers, the DCLG has also published a supplementary table of completions by postcode district, showing that NewBuy purchases have been spread across the country. The postcode with the most sales is for Dartford in Kent, where there have been 40 purchases.
The government could incur costs if a home sold under NewBuy is taken into possession and sold at a loss. Even then, there will be no cost to the government unless the loss on the sale exceeds the total of the builder’s corresponding indemnity fund. So, while the scheme may help only a relatively small number of home-buyers, it is unlikely that it will lead to significant costs for the government.
Table One: Quarterly and cumulative data for NewBuy up to 31 March 2013
|Period||Completions||Maximum government liability £million||Costs incurred £million|
|12 March - 30 June 2012||253||2.6m||0|
|1 July - 30 September 2012||376||3.8m||0|
|1 October - 31 December 2012||908||9.1m||0|
|1 January - 31 March 2013||754||7.6m||0|
|Cumulative total to 31 March||2,291||23.1m||0|