Will we miss Help to Buy?
The Government announced yesterday (29 September 2016) that they will close the current Help to Buy mortgage guarantee scheme at the end of the year.
Launched in 2013, the scheme was designed to encourage lenders to offer higher loan to value (“LTV”) mortgages on properties priced up to £600,000. Subject to certain criteria the Government would underwrite 15% of the mortgage, so with buyers putting down a 5% deposit a lender’s exposure would be limited to 80% of the value of the property.
Since its launch in October 2013, some 35 months ago, the scheme has helped 86,000 households get on to the property ladder – an average of 2,457 households per month. Recent figures confirmed that there were some 1,105,380 residential transactions in England and Wales in 2015. Taking the monthly average and applying this to the same 12 months the mortgage guarantee scheme was only used in 2.67% of 2015’s residential transactions.
The Government’s view is that the specific purpose of the scheme has been “successfully achieved” with a number of lenders now offering 95% LTV mortgages. However, in March last year lenders were warning that failure to replace the scheme when it comes to an end could lead to a decline in the number of first-time buyers.
Given the current uncertainty surrounding the Government’s decision as to when they will trigger Article 50 is the “mission accomplished” statement premature? Only time will tell…
Nevertheless following the confirmation that the Government’s other Help to Buy schemes (including the popular equity loan) will continue to run until 2020 first-time buyers need not lose all hope as there are still opportunities available to help them take that first step on to the ladder.
If you are considering buying a property, either with or without the assistance of the Government’s Help to Buy schemes, and would like to talk to CBG Law about the legal aspects of the conveyancing process and obtain a competitive quotation then please call Nistha Jeram-Dave on 020 7436 5151 for a free initial conversation or email njd@cbglaw.co.uk.