The housing industry received a welcome boost in this week’s budget in the form of a £3.5 billion investment in government loans to homebuyers and a ‘Help to Buy’ scheme worth up to £12 billion to increase the availability of mortgages to those who don’t have a large deposit.
Industry professionals have largely welcomed the Chancellor’s announcement of the Help to Buy scheme following increasing demand for government intervention on the housing ‘crisis’ in recent months but questions were asked as to whether the efforts would make enough impact.
Robert Bartlett, CEO of Chesterton Humberts, comments on its implications: “As the Chancellor mentioned in his first-ever tweet on the morning of his speech, this budget was aimed at helping people who just ‘want to work hard and get on’. The main announcement affecting the property market was that of ‘Help to Buy’ – a scheme designed to help buyers get on and move up the property ladder by providing equity loans for purchasers of new build homes and mortgage guarantees to other buyers.
“Second steppers, and even third, fourth and fifth steppers, are the surprise beneficiaries of this year’s budget as they have now been allowed to enjoy some of the incentives that have previously only been available to first-time buyers. Under the ‘Help to Buy’ scheme, which will not be means tested, all buyers buying under £600,000 and with at least a 5 per cent deposit can access the equity loan scheme when buying a new build property or the mortgage guarantee scheme, which is not restricted to just new homes.
“Overall, I welcome the measures relating to the housing market, which definitely represent good news for aspiring homeowners and the housebuilding sector, but I am still questioning whether there was enough in the Budget to really build on and sustain the momentum seen so far this year.”
Martyn Smith, Head of Mortgage Products at Legal & General Network, said: “Many people will be pleased to hear about the Government’s new Help to Buy scheme announced in today’s Budget. Those with little equity in their current home, or with only a small deposit for their first home, will benefit most.
As with so many of today’s announcements, it may be some time before the details of this arrangement are made clear. Whether or not it marries up with current schemes, such as NewBuy, is yet to be seen.
It will be interesting to see how mortgage lenders bring this to life with good value products that will allow both first time buyers and second steppers to benefit from these schemes.”
Robin King, director at Move with Us, the residential property specialist, commented on the impact for second time buyers: “The news that the Chancellor is to release £3.5bn to aid first and second steppers with the introduction of the new Help to Buy scheme is welcome news for the property market however concentrating incentives on new homes is a short-term solution.
“It is first time buyers who drive the much larger chains in the sale of pre-owned stock, creating fluidity in the market. The new measures, which will increase the supply of low-deposit mortgages and therefore help people who are looking to fulfill the national desire of owning their own homes, are clearly a step in the right direction. However, there is still more that could have been done to offer first time buyers a springboard to the property ladder and revitalise the UK’s property market such as providing more incentives for pre-owned stock. This would give second steppers greater freedom to work their way up the ladder by purchasing second hand properties while at the same time freeing up more small homes that are ideal for first time buyers.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments on the new mortgage guarantee: “The mortgage guarantee announcement should provide the extra boost that’s needed to accelerate lending for house purchases up the loan to value (LTV) scale. It will relieve a real headache for anyone struggling to fund a deposit for a home, and should help to boost confidence in the market at a time when house prices are beginning to rise.”
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