The Budget announced by George Osborne last week gave an unavoidably bleak view of the UK economy and the extent, or rather lack of, recovery so far, with GDP only up by 0.6%.

However, the housing market received a huge boost from Osborne as he made it the focus of his policies with a two part “Help to Buy” plan, aimed at kick starting the wider economy.

The first measure introduced is an extension of the existing FirstBuy shared equity scheme, to which th government has pledged a staggering £130bn. FirstBuy will now be available to everyone, excluding buy-to-let landlords, on new build properties up to the value of £600,000.

Purchasers will receive a loan of up to 20% of the purchase price, interest free for five years, after putting down a 5% deposit. After five years the loan will be subject to a 1.75% fee which will rise annually by retail index inflation but can be repaid at any time. This scheme is available immediately.

The second measure will provide £12bn worth of government backed mortgage loans, designed to decrease the risk for the lenders. The government will guarantee up to 20% of the lenders loan in an effort to encourage lending to house buyers with small deposits, thereby making the government liable if the borrower defaults on payments.

This mortgage guarantee will only apply to owner occupiers purchasing properties, new build or period, up to the value of £600,000. It is hoped this will help homeowners stuck in their current property to re-mortgage and move on. This will be available from January 2014.

The policies have been welcomed and criticised in equal measure and are, as yet, un-finalised in their details. Time will tell how these policies play out for both the housing market and for house buyers.

Sources: CBRE and The Telegraph