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Help to Buy scheme launched early

Thursday, October 17, 2013 Posted in: Property Market Landlords Tenants

David Cameron recently announced at the Conservative party conference that the Help to Buy Scheme will be put into action 3 months earlier than the proposed launch in January.

Starting in October, home owners and first time buyers will have the opportunity to get onto the housing ladder taking advantage of 5% deposits when buying a house up to the value of £600,000.

This new scheme will make very little difference to the buyer; however the works in the background will help people who can’t currently afford to save a 10-20% deposit get onto the housing ladder.

The help to buy scheme offers two different options for potential home owners:

- Mortgage guarantee Intended to increase the availability of mortgages offering competitive rates starting at just 5%

- Equity loan The government will loan you 20% of the cost of a new build home. This means it is possible to buy a new property with a 5% deposit and a 75% mortgage to make up the rest.

To find out which scheme would work best for you, it is advised that you speak to an estate agent, mortgage advisor or independent financial advisor.

Banks are already seeing the benefits of the scheme, with RBS, NatWest and Halifax already starting to take applications. HSBC and Virgin Money will be joining the scheme in due course.

With the introduction of the Help to Buy scheme there is likely to be an increase in first time buyers.

Since the recession many young people have been unable to get on the housing ladder and therefore become long term renters (as is the norm in other European countries). In Great Brittan we are historically a nation of homeowners and the Help to Buy scheme is likely to enable some of these trapped tenants who have the desire but not the means to buy, to get out of the PRS.

Due to the instability and drop in house prices since the recession many home owners and inherited property owners have looked to the PRS as a short term solution. This enabled property owners to benefit from the strong lettings market in a time that it has been difficult to realise true value when selling any property asset. It is likely that some of these ‘accidental’ landlords will be thinking now is a good time to sell. 

Although this is all speculation, we cannot say for sure how the Home Choice Scheme will really affect the property market. As we monitor the effects and trends we will be sure to keep you informed.

For more information on the Help to Buy Scheme click here

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