The Help-to-Buy scheme was introduced in April 2013 with the goal of making new build homes available to everyone and not just first time buyers. With protection provided to both buyers and lenders being granted, a mortgage seemed like a dream come true.
With the Help-to-Buy Equity Loan, the Government lends potential buyers up to 20% of the total cost of a new-build home, meaning only a 5% deposit and a 75% mortgage is needed. The mortgage guarantee scheme is in essence; a security measure put in place by the Government guaranteeing up to 20% of the mortgage lent protecting the lender if the buyer defaults on a payment.
Since its introduction last year over 48,000 people have completed a sale thanks to the schemes put in place. London and the South East saw the largest share of loans with a total of 10,338. The capital saw 2,837 people take out either an Equity loan or the Mortgage Guarantee Scheme, putting the North West at a close second.
The majority of loans taken out were by those buying their first home representing 85% of total completed sales, proving that the ambition of assisting those in need of their first home was a success.
One example of those benefited by the scheme include Simon Clarke, a family man who, after a long and unsuccessful search of the property market, made his first step onto the property ladder thanks to the Help-to-Buy scheme. Although it was a new process many were unsure about, it was an avenue well worth exploring. He says, “We found the whole process very straight forward and we would recommend the scheme to others in a similar situation”.
However, some experts believe that the increase in newly built properties being sold could have an impact on the market as a whole. It has been pointed out that the lack of affordable housing being built puts more pressure on potential buyers as the new demand outweighs the supply, in turn, increasing house prices. Unless the Government can provide a substantial supply of new build properties, the Help-to-Buy scheme will become less effective and some commentators say that it could lead to another ‘property boom’.
Some critics are worried that the scheme could simply help relatively well-off people move further up the property ladder. The Labour Party comments that the scheme does nothing to combat the shortage of affordable housing and wishes to concentrate on recreating the much needed supply.
So far, the scheme has proven to benefit those who lack the near £30,000 deposit required for their first home. Providing the Government can build enough affordable housing to keep up with the additional demand, the Help-to-Buy scheme will present those in properties to rent, a window into the world of property ownership. If the Government fails however, a second ‘property boom’ could put potential buyers in an overall, worse situation.