Second Part of the Help to Buy Scheme Revealed by George Osborne

Second Part of the Help to Buy Scheme Revealed by George Osborne

In a recent meeting with mortgage lenders and housebuilders, George Osborne explained the terms of the second part of the Help to Buy Scheme to be launched in January 2014 on property purchases up to the value of£600,000.

There are worries that the Help to Buy Scheme will inflate house prices and lead to a housing bubble. The Homeowners Alliance is also sceptical that it may cause people to take on huge mortgages.

George Osborne has laid out strict terms for the scheme hoping to avoid these negative issues. Purchasers applying for the scheme will undergo strict income checks and will be made to sign a declaration to declare that they are not using the loan guarantee to secure a second home. These checks will determine whether the buyers can afford the mortgage.

The aim of the scheme is to allow more people to be able to afford a home loan without having to save for a large deposit. Ministers claim that the second part of the scheme could enable up to 190,000 new mortgages each year over the 3 years of the scheme.

Lenders will have to pay a fee, the amount which has not been concluded yet, for each mortgage guarantee. The lowest interest rates are usually on mortgage with a LTV of up to 60%. This makes borrowing a lot more expensive for potential buyers with small deposits. The second part of the scheme aims to enable lenders who offer mortgages with a high LTV a chance to buy a ‘guarantee’ on the portion of the mortgage between 80% and 95%.

Potential borrowers have to go through ‘stress testing’ and income verification to ensure they can afford the mortgage. Anyone with a bad credit history will not qualify for the scheme.

For more information visit our dedicated Help To Buy website www.helptobuy.me.uk

Help to Buy showing positive impact upon the housing market!

Help to buy showing positive impact on the housing market!

The new government Help to Buy scheme is proving to be a big success. The scheme has beaten forecasts which were predicted to show positive signs regarding the housing market. According to the Home Builders Federation (HBF) 4,000 people have reserved a new home under the Help to Buy scheme since it has been live over the last 2 months. In conjunction with this the interest in the scheme has been huge and more than 500 buyers each week are signing up for the new scheme.

 

House prices rising

Halifax has also pointed out that UK house prices are rising at their fastest rate since September 2010. Launched in April 2013 the Help to Buy scheme offers first time buyers and existing homeowners an interest-free (for the first 5 years) loan to build upon a deposit to help them buy a new build property. The buyer only needs to raise a 5% deposit to qualify for the scheme and the government then contribute a further 20% enabling the buyers to get a better rate, more affordable mortgage and move on/up the property ladder.

Experts Criticism

However the data showing evidence of house prices increasing is likely to cause criticism of the Help to Buy Scheme. Some experts have warned of a housing bubble with house prices inflating to high levels. The scheme is currently set to run until 2017. Halifax have stated that the average price of a UK home is now £166,898 which is an increase of 3.75 compared with May 2012 when the average UK house price was £160,906.

Although there are signs of improvement regarding the housing market these are still limited with our low economic growth and weak income growth. These issues will be a constraint upon the housing market in the long term.

First time buyer’s increase

The number of first time buyers taking on mortgages increased by 15% in April when the scheme began, according to property group LSL. This may have been due to the support of the scheme and lenders becoming more flexible about offering mortgage with high Loan to Value proportions.

If you want more information about the Help to Buy scheme or a quote for your conveyancing Help to Buy transaction then visit our dedicated Help to Buy website.

Click here for more information about Help to Buy

The Waitrose Effect

The Waitrose Effect

Would a Waitrose in the vicinity of a property sway your decision in buying a home?

Savills have released recent research which showed having a Waitrose nearby increased property prices in the area. There are two ways to look at this, firstly people want to live close to a Waitrose or secondly areas which Waitrose locate are where property prices are increasing.

In London the ‘Waitrose Effect’ shows a significant difference. There is a 50% increase in property prices in areas with a Waitrose, compared with areas that do not have a Waitrose. This difference is not as drastic in other areas but still apparent.

The outcome of this research was that the typical price of a property with a Waitrose nearby was 25% higher than if there was no Waitrose. Although the answer is not determined by the increase being due to a Waitrose, there sure is a definite trend in the relationship. However it does seem bizarre that the arrival of a supermarket should have this effect on property prices.

Waitrose is known for its higher end groceries and perhaps by placing a branch in a particular area represents the area as being socially approved and an aspirational area to live in. There is always the argument of which came first however, was the area upmarket and attracted a Waitrose branch or did Waitrose place a branch in an area and this lead to a positive knock on effect on the prices of property.

What’s your opinion? Would you pay a little more to live somewhere you had a nice deli selection?