Date Published 07 October 2013
The take-up of the second phase of Help to Buy – which launches this week – looks set to be highly significant.
Two separate pieces of research have come up with entirely different numbers – probably because they were done at different stages and before the early introduction of the scheme was announced nine days ago – but both predict that large numbers of young adults will utilise the taxpayer-backed mortgage indemnity scheme.
Mortgage applications can be made from now under the scheme, with further details due to be announced tomorrow as to lenders and rates. The loans themselves will not be available until the New Year, meaning that house sales can be agreed and go to exchange, but not completion before then. The entire scheme was originally intended to go live on January 1.
According to the Mortgage Advice Bureau, 65% of young adults plan to buy their first home or move house during the three-year lifetime of the scheme which gives access to 95% mortgages. Santander puts the proportion at one in three of all buyers.
The Help to Buy equity loan scheme, available only on new homes and which was launched in April, has already had a major impact in the new-build market with over 12,500 reservations in its first five months.
The second phase of the scheme is available on all property rather than just new-build homes. One in five young adults say they are more likely to buy a second-hand home as a result of the scheme, says the MAB research.
The research for the MAB was done last month among 1,022 UK adults aged 18 and above.
According to Santander, more people are now planning to buy a property in the next 12 months than was the case at the start of the year.
Of those, 33% would be first-time buyers, 32% home-movers, and the balance either buying second homes or buy-to-let properties.
Phil Cliff, director of Santander Mortgages, said: `Help to Buy is certainly stimulating the market and the extension of the scheme from January 2014 should see existing home owners who have been unable to move entering the market again.`
Meanwhile, London estate agent Peter Rollings, CEO of Marsh & Parsons, said the scheme would be of help in the capital.
He said: `The bringing forward of the Help to Buy scheme is certainly encouraging politically charged tit-for-tat with more spin than Shane Warne in his prime. But the scheme will help to stimulate the UK housing market over the short term like a shot of adrenalin.
`Outside London the market desperately needs this impetus, while in London over the last 12 months we have seen price increases of between 10%-15%.
`Yet the capital needs this stimulus to free up mid-ladder buyers who want to become first-time sellers. This will create a much healthier balance between supply and demand and it`s these buyers who need help to meet the often stringent lending criteria of the banks.`