Help to Buy sees boost in new home sales
The government’s Help to Buy scheme, launched just four months ago, has already resulted in almost 3,000 sales of new-build homes with 10,000 homes reserved. The scheme, which is particularly targeted at assisting first-time buyers, enables buyers to purchase a new home to the value of up to £600,000 with only a 5% deposit.
House builders have praised the scheme with Barrett saying it is on course to sell 20% more homes this year than two years ago, is actively investing in land, and taking on 600 new apprentices and graduates. Persimmon, too, is complimentary of the scheme and says it will have wider benefits for jobs and the economy.
The second part of Help to Buy will begin in January 2014. It will comprise a mortgage guarantee scheme, administered by the Treasury, which will enable lenders to use Government-backed guarantees to offer £130bn worth of mortgages with deposits of just 5% on both new and existing properties.
However, the Help to Buy scheme is not without its critics. Many fear it will contribute to a new housing bubble. Chitraj Channa, an economist with the Centre for Economics and Business Research, has said, “The Bank of England will have to keep a close eye on the growing credit supply to ensure that we do not recreate the very conditions that caused the financial crisis in the first place.”
According to the Council of Mortgage Lenders, lending in June to first-time buyers was up 30% on the same month last year, while the total lent in the second quarter of this year was the highest quarterly total since 2007.