The second phase of the government's Help to Buy scheme has now been rolled out, but it may be the first part of the initiative that becomes known as the runaway success. Housing minister Kris Hopkins told an audience at a new housing development in Northampton that the equity loan scheme has seen over 15,000 reservations for new build homes being made in the first six months of operation. Indeed, it has served to give the market a much needed kick start, increasing building and getting more people onto the property ladder.
The scheme enables buyers to purchase a new build home with just a five per cent deposit by using an equity loan from the government of up to 20 per cent on properties with a value of GBP 600,000 or less. Almost 30,000 people have bought a new build property through a government-backed ownership scheme in the last two years and demand is continuing to grow.
This is having a positive effect on the UK construction industry, helping the country to begin addressing its supply shortage. Indeed, home building is now growing at its fastest rate for ten years and builders have pledged to build on this momentum. Housing supply is currently at its highest level since the end of the real estate boom in 2008, with 334,000 new properties built over the last three years.
Mr Hopkins said: "It’s clear the first part of our Help to Buy scheme, the equity loan, has captured the imagination of the public and is boosting the supply of new homes across the country. Our policies on housing are working. House building is growing at its fastest rate for ten years, and the tough decisions we’ve taken to tackle the deficit have kept interest rates low and are now delivering real help to hardworking people."
However, Help to Buy could be undermined by continued price inflation. The Intermediary Mortgage Lenders Association (IMLA) claims mortgage brokers and intermediary lenders agree that value inflation could lead to a house price bubble. Indeed, 60 per cent of lenders and 59 per cent of brokers consider rising prices to be the single gravest threat.
Is Help to Buy all it seems? We look a little more closely at the controversial scheme
- Wednesday 16 October 2013