The Government's Help to Buy scheme was launched with the noble intention of boosting house building, helping first-time buyers and ensuring more people can get on or move up the ladder, and happily it seems to be having the desired effect. Latest official figures reveal that over 17,000 properties have already been bought through the scheme, meaning over 17,000 households are happily enjoying life in their new homes.
The 17,395 total relates to the first nine months of the scheme, with the figures revealing that 88% of those homes went to first-time buyers. As an added boost, 77% were bought outside London and the South East, perhaps quietening critics who thought the scheme might not be benefiting those who really need it.
There are hopes that this total could increase over the coming year, particularly as more purchases will get to the completion stage and more homes will (ideally) be built to fuel the equity loan portion of the scheme. This was the initial phase and helps people secure a new build home with a deposit of just 5%, with the Government providing a loan of up to 20% to help cover the cost.
The figures were released just days after it was announced that the equity loan part of the scheme would be extended to 2020, four years after its original cut-off date, and has the potential to help even more people buy their ideal home. So far some 15,000 homes bought were done so with the help of an equity loan, with the remainder being bought through the mortgage guarantee part of the scheme.
This was introduced in September and gives people the chance to again secure a home with a 5% deposit, but this time they'll need to get a full 95% mortgage (with the Government providing a guarantee against losses for participating lenders) and don't have to opt for new build properties. Meanwhile, the figures also revealed that the average price of a home bought through the scheme overall was £194,992, with equity loan purchases proving more expensive (£203,137 on average) than homes bought with the mortgage guarantee (£148,048).
Surely, then, this would mean that the scheme is having the desired effect? Not only is it helping more people get on the ladder, but sales of newly-built homes have risen by 23% since the launch of the equity loan phase in April last year. Construction companies are supporting this view with impressive figures and many are boosting their level of house building in response, but critics are warning that more still needs to be done.
Specifically, they're calling for more homes to be built, particularly as the imbalance between supply and demand is helping to push up house prices and make that first home slip even further out of reach.
"Any help for first time buyers struggling to get on the property ladder is to be welcomed," said Labour's shadow housing minister Emma Reynolds, "but rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle-income earners… You can't deal with the cost-of-living crisis without building more homes."
Ideally this is something which will be addressed in the foreseeable future, with the clear increase in demand for new build homes hopefully ensuring more construction projects will begin. As more homes are being built there'll be a stronger level of supply to satisfy demand, which should, in turn, mean house prices don't become prohibitive.
It'll mean mortgage repayments stay more affordable too. A higher mortgage would result in higher repayments, but if house prices don't shoot up too much even a 95% mortgage shouldn't become too restrictive.
Check out the best rates to keep your repayments as low as possible and see if you can benefit from Help to Buy
Looking for more information on Help to Buy? - Check out our guides Mortgage Guarantee or Equity Loan
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