Buy a home with £4,000 as Halifax halves deposits needed for new-build homes

Britain's biggest lender Halifax will halve the deposit needed to buy new-build homes from 10pc to 5pc from July 1 - meaning buyers can purchase with as little as a £4,000 deposit.

Halifax said based on the average house price of £289,099, the minimum deposit needed could now be £4,000. This assumes someone pays a 5pc deposit when buying a 25pc stake in a shared ownership home.

Andrew Asaam, Mortgage Director at Halifax, said: “We recognise that getting a deposit together is still the biggest hurdle faced by most first-time buyers, and these changes could reduce the minimum deposit required on an average house to as little as £4,000."

Halifax's changes will bring new-builds in line with existing properties. Anthony Codling of property platform Twindig said the news would be welcomed by housebuilders who’ve long been “frustrated” by lenders' decision not to offer high LTV mortgages to the new-build sector.

Mark Dyason of Edinburgh Mortgage Advice, who called the move a “huge vote of confidence” in the sector, said Halifax is changing its lending criteria now because it wants to continue supporting new-builds after the Help-to-Buy equity loans scheme finishes next year.

“With the scheme coming to an end in March 2023, Halifax is announcing this well ahead of time to ensure people with smaller deposits have their needs met,” he said.

While the new criteria will help first-time buyers clear the deposit hurdle, this doesn’t close the colossal gap between average wages and property prices, Mr Colding pointed out. While the average rate for a two year fixed-rate mortgage has soared, salaries are not rising at the same rate.

One benefit of buying a new-build property is potentially cheaper energy bills. Properties built after 2012 must have an average energy performance certificate rating of B or better, whereas it’s D or worse for homes built before 1982. Halifax said that purchasing a new-build could save first-time buyers over £500 a year in household bills.

But first-time buyers should think twice before rushing to put a deposit down.

Buyers pay an average 20pc premium on new-build-properties, according to Data company TwentyCi, because they will spend less on maintenance and repairs. However, research has shown that new-build home prices can struggle to match local property market price growth. Buyers should take a step back and do their research to make sure the new-build is actually good value, said Mr Dyason.

“Just because you can get a property for a small deposit doesn’t mean you should," he said.