New Home Loan Scheme for Forces First Time Buyers
Timed to coincide with the Conservative Party Conference, Mr Hammond, the Secretary of State announced a new ‘Forces Help to Buy’ scheme to help personnel buy their first home. The £200m trial will start from April 2014 for the next 3 years and will offer Regular personnel loans of up to 50% salary, capped at £25,000, interest-free and repayable over a 10-year period.
Due to the demands of Service life, home ownership amongst the Forces is markedly lower when compared with civilians in similar socio-economic groups. For officers, only 70% report to owning their own home compared to 90% of their civilian counterparts; and the figures for soldiers are even more stark with only 35% in house-ownership compared to 65% of a similar socio-economic group. Mr Hammond said: “It further demonstrates the Government’s commitment to strengthen the Armed Forces Covenant, ensuring that personnel and their families are not disadvantaged by their service.”
The proposal is a fundamental part of the New Employment Model (NEM) supporting greater lifestyle choice and it is hoped retention of personnel. The ongoing consultation with Service personnel has reinforced strong appetite for home ownership and a need for more financial support – this has been heard. The interest free loan will be capped at £25k or 50% of your current annual salary; it will be taxable and is to be repaid through your monthly salary over 10 years. Importantly will be available regardless of marital status for both married and single personnel. Sadly, it is only for those who wish to buy their first home and will not be available to assist those who have already bought a home.
As all of the Forces become more static, the proposal is to be whole-heartedly welcomed for those who wish to settle in an area, permit their partners to have their own career and to give their children stability. Today, the Centre for Economics and Business Research revealed that house prices across the country will rise 2.9% to an average of £225,000 this year. The Centre supports rumours of a further property boom, suggesting that there will be 3.9% in 2014 and that by 2018, the average UK price will jump 23.7% to £278,000. Recognising this, Chief of Defence Personnel, Lt General Andrew Gregory CB said:
“The sum available through the Long Service Advance of Pay no longer reflects the modern day costs of getting into home ownership. Help to Buy: Forces will offer more realistic financial support to personnel wishing to buy a home. The aim is to increase home ownership, providing greater lifestyle choice for our people”
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