Around 4,000 people have reserved a new home in the Government’s flagship ‘Help to Buy’ housing scheme according to the Home Builders Federation (HBF) since the scheme was launched in April which has led to the fastest rise in house prices since September 2010.
The ‘Help to Buy’ initiative was aimed at boosting the construction industry as well as helping first time buyers with small deposits get on the property ladder. The scheme offers aspiring homeowners up to 20% of the value of a new home worth up to £600,000 as an equity loan.
Stewart Baseley, executive chairman of the HBF said “The equity loan scheme helps consumers overcome the deposit barrier and as a result the scheme will undoubtedly lead to an increase in house building.”
“Already we are seeing companies revise their projected build levels as a direct result of the scheme. This in turn will create jobs and deliver an economic boost.”
Figures have shown that the number of first-time buyers soared by 15% in April to 22,000 as new buyers took advantage of low rates and a wider choice of mortgages according to LSL Property Services.
Criticisms of ‘Help to Buy’
However, there have been a number of criticisms of the ‘Help to Buy’ scheme. Critics have suggested that it has pushed the price of a new build rather than encouraging the construction of new homes. The International Monetary Fund (IMF) suggested that the ambitious mortgage plan could to more harm than good as it will boost the demand for housing without necessarily boosting supply.
The scheme has also been labelled as the “one of the most stupid economic ideas of the past 30 years” by leading City commentator Albert Edwards.
Scotland’s 'Help to Buy' alternative
The ‘Help to Buy’ scheme is, unfortunately, not available in Scotland however the Scottish Government has launched their own £120m response shared equity scheme over the next 2 years to help home-buyers.
Deputy First Minister, Nicola Sturgeon said the scheme will help buyers while boosting the construction industry.
Sturgeon said, "People in Scotland who should rightly be able to afford a mortgage are still facing real challenges buying a home."
"We are well aware of the challenges that people face and want to continue to do all we can to help," she added. "The £120m funding announced today will not only help people to buy their first home, it will also help second-steppers to be able to sell their home and to move to another property.
Ministers are currently working with the house-building sector to develop the initiative.