Lloyds TSB’s Local Lend a Hand scheme has helped more than 1,100 first-time buyers take their first step on the property ladder with almost £125 million lent in mortgages, since its launch two years ago.
Local Lend a Hand enables borrowers who could afford the mortgage repayment but are struggling to build enough savings to buy their first home with a lower deposit than usually required by most mortgage lenders.
The first scheme was launched in Blackpool with first-time buyers able to apply for a mortgage from 1 July 2011. Since then, there have been 53 schemes launched with 47 local authorities and more are set to join during 2013.
With an average house price of £123,960 across the schemes, 47% of these first-time buyers bought a terraced property whilst 41% bought a semi-detached property.
78% of councils joining the scheme said Local Lend a Hand has had a positive impact in their area. 91% said they would recommend the scheme to other local authorities.
Almost all the councils surveyed (96%) said they are considering extending their Local Lend a Hand Scheme, with many having done so already. 64% are also setting aside further funds to help first-time buyers in their area1.
According to the latest CML data, the number of first-time buyers rose 17% in February 2013, compared with February 2012, and has almost doubled (93% higher) since the trough of the market in January 2009. However, figures are still 59% lower than the height of the market in June 2006.
The total value of house purchases by first-time buyers in 2012 was £26.5 billion. This was less than half the amount in 2006 (£54.4 billion) but 10% more than the amount in 2009 (£24 billion).
Each first time buyer also make an average additional spend of £8,000 when buying a property, taking into account moving costs and furnishing their new homes. Add in stamp duty and the total amount spent in 2012 equated to an estimated £1.9 billion.
First-time buyers spend, on average, around £3,000 in legal fees, valuation fees and other costs. In 2012, first-time buyers spent an estimated £635 million on these moving costs; £68 million more than in 2011. By comparison, first-time buyers spent an £585 million a year on moving costs at the trough of the housing market between 2008 and 2009.
Furnishing a first home also adds to the expense. Spending on household durables such as white goods, curtains and carpets as well as home improvements is estimated at an average £5,000. First-time buyers spent a total of £1 billion in 2012 on such items which is £115 million more than in 2011. The 2012 spend is half than the estimated £2 billion in 2006 but slightly more than the estimated £960 million in 2008.
During 2012, it is also estimated that first-time buyers generated £270 million in revenue for the Exchequer through stamp duty.
Marc Page, Lloyds TSB mortgage director, said: “There can be no doubt that first-time buyers have a significant economic impact. However, it has been a difficult time to take that first step on the ladder with many struggling to raise the required deposit.
“We are proud of the success the Lloyds TSB Local Lend a Hand schemes have already achieved. Working with councils to help first-time buyers in their area is already having a significant impact at a local level and is helping to get their housing market moving again.”