News

Reports in national newspapers over the weekend suggested that the Prime Minister Rishi Sunak wants to bring forward some sort of scheme to offer support to renters who want to get onto the housing ladder. The Times said officials in both Downing Street and the Treasury are looking at proposals to help support first-time buyers. First time buyers of the scheme could borrow an equity loan from the Government of up to 20% of the property’s value, or up to 40% if the property was in London and it was interest-free for the first five years. “We cannot go into the next election without an offer for first-time buyers,” one minister told The Times.

According to the reports, help to buy scheme was mooted before the Spring Budget but was dropped over fears that it could make inflation. However, it appears to be back on the table for the Chancellor’s Autumn Statement. It could be extended to older properties as well. There has also been speculation around extending the mortgage guarantee scheme, which pushes lenders to offer 95 per cent loan-to-value mortgages, but which is due to conclude this year.

Back in January, the government closed the scheme in last January and said they are not looking to extend or replace the Help to Buy scheme as the scheme has been widely criticised for inflating the values of new-build properties.

Brokers have previously warned that the deadlines, and the way the scheme has been wrapped up, are putting clients in difficult situation and experts warn  that it could make inflation worse They also argue that the scheme has earlier contributed to house price inflation, making it more tough for buyers to enter the market. Critics have categorised the scheme as a means to “Help to Sell” for house builders, rather than genuinely aiding first-time buyers.

Graham Cox, founder of Self Employed Mortgage Hub, said that relaunching Help to Buy was a “terrible idea”, with the mere suggestion of it showing “which way the wind is blowing for house builders”. Gareth Davies, director at South Coast Mortgage Services, said the scheme had encouraged people to buy properties that they could not really afford.
Sources: the Times, Mortgage solutions and the intermediary

Read more -->