A Chain Reaction in Conveyancing Transactions When you sell or purchase a property, it may become apparent at some point during the transaction that there is a chain either above, below or both. “The property chain is when homebuyers and sellers...
Help to Buy Scheme continues to boost housing market
- AuthorAmanda Payne
The second phase of the Government’s Help to Buy Scheme launches on the 7th October, three months earlier than planned. This Scheme helps first time buyers and existing home owners to move up the housing ladder and purchase a property up to £600,000.00.
Twelve billion pounds has been set aside for the Scheme which has already been a success for developers who have seen an increase in sales already this year.
The Scheme allows a buyer to acquire a property with just 5% deposit, with the additional 20% being supplied in the form of an equity loan from the Government. The remaining 75% is then borrowed by a mortgage from one of the lenders who have signed up to the Scheme. This incentive is intended to help strengthen the economy although there is mixed opinion. Some commentators feel it will push up property prices and potentially cause a “bubble”.
The Government loan is interest free for the first five years and after that home owners will pay an annual fee which will rise annually although borrowers can repay the loan at any time. Buy to let landlords or someone looking to buy a second home will not be eligible under the Scheme and interest only mortgages or self-certified mortgages will not be offered through the Scheme. Lloyds Banking Group and Royal Bank of Scotland are currently taking part in the Scheme with Lloyds offering the Scheme through its Halifax brand. More lenders are expected to sign up to the Scheme in the coming months.
I suspect there is a long way to go before we have to worry about the bubble bursting despite a reported rise in the cost of homes recently, the fastest in three years. The Help to Buy Scheme appears to be having a positive effect on the housing market and first time buyers and the Government seem firmly committed to the Scheme and maybe this has been the trigger for getting the market moving again. In fact Fishers has certainly seen the number of enquiries and instructions increase significantly in the last few months.
The Scheme is likely to increase the total number of potential home buyers without actually increasing the supply of housing. On a simple supply and demand theory, this is only likely to push house prices up even higher. Only time will tell how successful the Scheme will be but it has certainly had a positive impact on the property industry since its initial launch.