Help To Buy scheme Gets Property Industry Moving
Chancellor George Osborne’s announcement in the Budget of a £5.4Bn funding package to assist people wanting to buy a property for the first time, or move up the housing ladder up to a ceiling of £600,000, has seen early signs of helping to get the industry back on it’s feet, the first part of which having come in to affect from the 1st April 2013.
Whilst some areas such as prime central London, parts of Surrey, and hotspots such as the World Heritage City of Bath (central area) and Clifton in Bristol have weathered the recession remarkably well, huge swathes of the country have felt the affect of house prices being depressed.
Help to Buy is made up of two schemes, the mortgage guarantee scheme and the equity loan scheme.
The first works by the Government lending individuals up to 20% of the value of a house or flat, which has to be new build (imspiring housebuilders to build much needed new stock). The second scheme, Mortgage Guarantee, which comes in to affect from January 2014 incentivises mortgage lenders to make more mortgages available for borrowers with small deposits (as little as 5%). The Government then guarantees a portion of the mortgage so the lenders are secure.
Neither scheme is available for Buy to Let investors or to companies, in an attempt to prevent another over-heated bubble where people are buying property they can’t afford.
The great thing is with these schemes is that they are not just aimed at first time buyers, although that is who is most likely to be attracted, so other people, wanting to buy a bigger house for example can also benefit.
The industry affects so many other industries and when the propety market is moving people spend in other areas, positively affecting other businesses bottom lines, such as DFS, B&Q, Homebase, IKEA, Carpet Right, Wyevale and many others and help create and sustain jobs and tax receipts in to the economy to support government spending.