Is Help to Buy set to make a comeback?
The Government is reported to have hired a consultancy to look at whether Help to Buy could be revived to give first-time buyers a much-needed boost.
Speculation is growing that the Government wants to revive Help to Buy and give first-time buyers a much-needed leg-up onto the housing ladder.
Reports suggest a consultancy has been hired to look at how effective the scheme was when it was running under the previous government.
The programme which gave first-time buyers an interest free loan to help them meet the asking price for a property, was ditched in October 2022.
Hired
But Twindig founder Anthony Codling, who is also MD of Equity Research at RBC Capital Markets, says: “The Government has hired a consultancy to evaluate the effectiveness, impacts and success of the scheme.
“Whilst this does not mean that Help to Buy is back, it does imply that the Government has started to seriously consider it,” he says.
Difficult to tell if this is a sign of an increasingly desperate or an increasingly determined Government.”
He says Help to Buy “was a very effective policy” in increasing the supply of homes and helping first-time buyers.
“Difficult to tell if this is a sign of an increasingly desperate or an increasingly determined Government,” he adds.
Arrears
There were problems though with Help to Buy, and many first-time buyers who purchased their home are now facing mortgage arrears.
And some FTBs have had to sell up and rent again, as the interest-free period ended after five years.
Since 2013 Help to Buy helped more than 387,000 first-time buyers to purchase properties worth £24.7 billion.
The government scheme had the biggest impact in the South East, enabling over 70,000 transactions – 18.2% of the national total.
A spokesman for the Ministry of Housing, Communities and Local Government denied there were any plans to revive the scheme, saying the Government had been asked to carry out a review by the House of Commons Public Accounts Committee.
If a scheme is announced it must be for new and secondhand homes equally. The previous schemes were heavily weighted to new homes, and developers were the main beneficiary. FTB’s were still in negative equity 2 years after buying a new home in our area when the market was increasing in value. First time sellers now need as much help as FTB’s so must benefit from any government scheme. The easiest and cheapest way forward is for the FCA to relax lending rules. Banks to lend at 100% and qualifying FTB’s to have the top 10% of their mortgage indemnified by the government for 5 years or until they move, whichever is first. Cost is £0 unless they are repossessed with less than 10% equity. Make sure that lending criteria is appropriate. Benefits are FTB’s come back to being able to buy their own home; first time sellers can get moving again. Builders can sell to FTB’s if they price correctly.