Announced in the recent budget and launched on the 1st April, the new Government initiative in support of the housing market the “Help to Buy” scheme.
This is intended to replace the First Buy scheme and is specifically aimed at the new build housing market. Access to the scheme is through the property developer and the local government housing agency, in the South West the scheme administrators are South West Homes and information on the scheme and how to apply can be found at :-
The minimum deposit required by a buyer is 5% of the purchase price, the government will then provide an equity loan of up to 20% of the purchase price. This is repayable upon the future sale of the property and is non interest bearing. This leaves the buyer only requiring and only paying for a 75% LTV mortgage. The buyer has to satisfy South West Homes that they are eligible for the scheme and of course they have to meet the lending criteria of the mortgage company. At this moment in time there is only one UK lender supporting the scheme, but we expect others to follow suit in the near future.
In January 2014 the second part of the scheme will be launched, the “Help to Buy Mortgage Guarantee”. This is more extensive and will apply to all buyers of residential properties. The Government will guarantee between 80-90% of the properties value, the buyer will still need to provide a minimum 5% deposit. This scheme is expected to provide up to £12 billion of government guarantees, sufficient to support up to £130 billion of high loan-to-value mortgages and will run for three years. This scheme in particular should provide a timely boost for the housing market and predictions are, that house prices will significantly increase.
So once again, I must stress that this is a great time to buy whilst property prices remain stable. We are now coming into the time of the year when we expect to see more properties appearing on the market and of course with the Help to Buy scheme we expect the major developers to release more new build properties to satisfy increasing demand.