by Mark Johnston
How is the Help to Buy Scheme is Doing?
It appears then that the new homes market has benefitted from improving consumer confidence throughout the year, having been supported by government schemes.
The Help to Buy equity loan scheme was announced in this year’s March budget it is aimed to help up to 74,000 homebuyers over next 3 years.
This new scheme is available to existing homeowners as well as first time buyers, with no specific age restrictions, and applies to both old and brand new properties.
At the moment over 400 house builders have already signed up to the scheme and most of the major lenders are currently on board.
Industry insiders have said that the scheme, which was officially launched on April 1st, had ‘captured the public’s imagination’ as it appears that thousands of prospective home buyers have been seizing the opportunity to buy a new build home with just a fraction of the normal deposit,
Data shows the Government’s interest free loan scheme has attracted thousands in just three months.
According to figures released by Department for Communities and Local Government, over 1,000 sales of new build homes have gone through since the scheme was launched on 1st April and also a further 6,000 buyers have reserved properties, some yet to be built.
Recent figures have revealed that the scheme passed the 4,000 reservations mark at the start of June this year and nearly 3,000 reservations have been made in the weeks since.
However while these figures are good news it seems that according to recent figures from the Home Builders Federation (HBF) Presently, around 115,000 new homes are being built each year, against an estimated demand of 220,000.
Therefore, Housing Minister Mark Prisk has told house builders he feels it is “time they raised their game” and has urged them to speed the building of new homes to meet the extra demand created by Help to Buy.
House builder Bellway has stated that the Government’s Help to Buy scheme has helped drive a ‘better than expected’ surge in demand as its order book jumped by more than 50 per cent.
Other house builders have also added that the government incentive schemes have boosted consumer confidence, sending visitors flocking to their sites and lifting reservations by around 27 per cent.
There are however still many who are very sceptical of these new government backed scheme.
Michael Pearce at Capital Economics, says “the risk for the chancellor is that Help to Buy reinflates the house price bubble that the UK saw in the run up to the 2008 recession”.
Former Bank of England Governor Lord King also adds “the world must have gone mad for us to now be discussing endless taxpayer guarantees for mortgages. They will drive up prices when it seems likely that house prices are already over valued.”
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