Help to Buy Scheme Debate Reignited After Surge

According to figures released over the weekend, 14,867 Help to Buy loans were taken out in the second quarter of this year. This brings the total loans up to 183,947 since the scheme started in 2013.

Between April and June, 82% of the loans taken out were for homes bought by first time buyers, with an average value of £239,000.

Since these figures have been released, the debate about Help to Buy has been reignited. Chancellor Phillip Hammond announced in October that the scheme would remain in place until 2021 amid speculation it would be scrapped within months. After 2021, it will only be available to first time buyers for a further two years, with regional caps on sales prices.

Critics believe Help to Buy has indirectly increased the prices of new build homes, the scheme's backbone, and have led to what is being regarded by some as excessive profits by developers tailoring products for the scheme's criteria, leaving buyers struggling with uncompetitive mortgages.

Supporters of the scheme say it has been instrumental in helping first time buyers get on the property ladder and keeping up with the demand in the industry.

Kate Davies, executive director of the Intermediary Mortgage Lenders Association, says: "2018 looks set to be the strongest year so far for Help to Buy sales, with total completions since the scheme began likely to have passed the 200,000 mark at the start of this quarter. This further highlights that Help to Buy will remain invaluable in supporting home buyers into the next decade and will play a crucial role in helping to keep the housing market on an even keel during a period of heightened uncertainty as a result of Brexit."

While Shaun Church, director at mortgage broker Private Finance, says: "Approvals have continued to grow year-on-year, suggesting there is still strong demand for options onto the housing ladder which don't require a hefty deposit.

"Though Help to Buy is a valuable route to homeownership, where possible it is best to exit the scheme once the five-year interest-free grace period is over or sooner if this is viable … The rates available on more traditional mortgage products are generally more competitive. Help to Buy borrowers are also expected to pay 10 per cent to 20 per cent back of the current value of their home rather than the original equity loan, so exiting the scheme enables them to enjoy more of the capital gains from their property should their home rise in value."


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