Thousands Use Help to Buy First Phase
The Help to Buy scheme was launched by the Government in April to help people buy new-build homes with a shared equity loan. Six months later, by the end of September, 5,375 homes have been bought using the scheme. Under Help to Buy, home buyers are given an equity loan of up to 20% of the property price after they stump up a 5% deposit. The scheme has now moved into its second phase, which is not restricted to newly built homes and has been rolled out across the UK (phase one excluded Scotland & Wales).
The average price of a property bought under the scheme was £194,167 with an average equity loan of £38,703. According to the Department for Communities and Local Government, the highest number of Help to Buy sales were in Leeds, Wiltshire, Milton Keynes and Reading. Many house builders say that their business has been boosted by the scheme, including Taylor Wimpey, which said that it had sold all the homes that it was building this year.
The housing minister Kris Hopkins stated that homes were being built at the fastest rate since 2008 and that “more people are securing a place on the housing ladder.” However, the shadow chancellor, Ed Balls, was understandably less complimentary about Help to Buy; he said that “if Help to Buy merely boosts demand for housing without being matched by action to increase housing supply, then prices will rise and rise.” His prognosis would certainly seem to be backed up by the fact that building activity is very low. In fact, last year, the number of new homes completed at its lowest number since the 1940s.
The recent spike in market activity, driven by relatively cheap home loans and Government intervention, seems to have been taken up by first-time buyers and buy-to-let investors. The Council of Mortgage Lenders said that there was negligible movement by those moving onto a second, larger home. This was the result of erosion of equity in their properties as house prices fell during the downturn years of 2008 and 2009.
Sources: bbc.co.uk, gov.uk (image courtesy of telegraph.co.uk)