Help To Buy Scheme to continue to 2021
- Published: Tuesday 08 August, 2017
- Category: Housing market
- By: Andrew Pelis
- Updated: Wednesday 09 August, 2017
The UK housing market received a boost over the weekend when, following rumours of its impending demise, the Department for Communities and Local Government (DCLG) announced that the Help To Buy equity scheme will continue until at least 2021.
The initiative has played an important role in attracting new house buyers, assisting over 120,000 property owners since its inception in 2013. According to the most recent Government data from 2015, Help To Buy has contributed 14% of total new build housing output.
Under the scheme, Help To Buy contributes funding for up to 20% of the price of a newly built home – and by so-doing, reduces the initial financial burden of a deposit. In London, escalating property prices saw the Government increase the upper limit for the loan from 20% to 40% in February 2016. The 20% (or 40%) funded does not attract loan fees for the first five years of the mortgage.
This news offers reassurance to an industry under pressure to meet new house build targets, while recent surveys have indicated that affordability has put many people off buying their first home.
With the DCLG reported to be joining forces with the London School of Economics, to review the whole Help To Buy initiative, widespread rumours of the end of this scheme triggered a fall in shares for a number of house builders.
However, fears that Help To Buy was nearing its end have proved wide of the mark, with DCLG announcing:
We remain committed to the Help to Buy Equity Loan Scheme to 2021, ensuring it continues to support homebuyers and stimulate housing supply.
“The Government also recognise the need to create certainty for prospective home owners and developers beyond 2021, so will work with the sector to consider the future of the scheme.
Andrew Turner, chief executive at Commercial Trust said:
The housing crisis in the UK hinges on the overwhelming failure of successive governments to deliver on building news homes. The latest statement from the DCLG that Help To Buy will continue for the foreseeable future, is a positive step in the right direction and good news for house builders.
“However, with demand for housing so high at present, versus a distinct lack of availability and affordability, alternatives such as the Private Rental Sector will remain a linchpin of the housing marketplace.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.