Is “Help To Buy” Helping The Housing Market?

 In blog-newington

The Department for Communities and Local Government have released a review showing that their equity loan scheme, also known as Help to Buy, has boosted market confidence among consumers, developers and lenders.

The latest figures show that the housing market has become much more stable with more and more young people are being helped to get their feet on the housing ladder. The instability previously present in the housing market since 2010 lead to many young people on low or middle incomes could simply not afford to save up the deposit required to purchase their first home. The recently released report confirms that the average Help to Buy applicant earns almost £50,000 making the scheme extremely helpful in securing the all-important deposit.

What is Help to Buy?

Introduced in 2013, the Help to Buy scheme offers first time buyers an equity loan of 20% of the purchase price. This leaves buyers with just 5% deposit to find for themselves and then leaves a 75% mortgage. The loan is free from charges for the first 5 years and after that the homeowners will be charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Price Index, plus 1%.

As of February 2016, in order to reflect the current property prices in London, the Government is increasing the upper limit for the equity loan it gives new home-buyers within Greater London from 20% to 40%.Housing minister Brandon Lewis said: “Anyone who works hard and aspires to own their own home should have the opportunity to do so and this report shows how the Government’s Help to Buy scheme continues to turn those dreams into a reality.”

What impact has Help to Buy had?

In the first 30 months of the scheme, 62,569 properties were bought (legal completions) with the support of the Help to Buy: equity loan scheme with 81% of these properties being bought by first time buyers. The review from The Department for Communities and Local Government said 82% of owners who bought under Help to Buy were only able to join the housing market because of the scheme, while 43% of Help to Buy homes would otherwise not have been built. All in all, the Help to Buy scheme has proven a real triumph in introducing more confidence and stability in the housing market as a new generation of homeowners have the ability to buy their first property.

There is good news for those looking to sell their homes in the current market too. Research from house-buying website Rightmove has indicated that that prices are now rising more rapidly in the east of England, where the Help to Buy scheme has seen the highest levels of uptake, than anywhere else in the nation including London and the South-east.The Help to Buy scheme, overall, has brought the housing market to a much more stable level where buyers and sellers alike can benefit.


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