Help-to-Buy Scheme Shifts New Homes

Recycling HouseThe Government’s ‘Help to Buy’ Scheme was extended in the recent budget, and a package of measures designed at allowing young, first time buyers to get on the property ladder if they choose to invest in new homes has certainly been a roaring success. At the moment, first time buyers are able to purchase new homes with as little as a 5% deposit, as government are prepared to loan up to 20% of the value of a house and mortgage lenders will offer up to the remaining 75%.

One-Fifth of New Builds Sold
From figures from estate agents Countrywide on the 31st March, around one-fifth of the houses build since April 2013 have been sold with assistance from the help-to-buy scheme. This is an enormous number of new buyers coming into the market, and it’s certainly helping younger buyers to buy sooner.

In places such as Newcastle and Manchester, however, the figures are considerably higher. Both boasted new build sales of 49% and 34% respectively which were attributed to the help-to-buy scheme.

The News for Landlords
The Help-to-Buy scheme is great for buyers, but it is a mixed situation for landlords. Of course, the prime targets of the help-to-buy scheme are tenants who are just saving as much as they can to make a deposit.  Traditionally landlords have done well from this area of the market.

On the other hand, many landlords are enjoying the boost in prices that has come as a result of the Help-to-Buy scheme. With first time buyers more able to secure property in expensive areas of the country, it’s certainly helping to keep prices going upwards and maximise capital growth for landlords.

Mortgage Guarantees
Another aspect of the Help-to-Buy scheme which has been successful is the mortgage guarantee scheme. Here the government is prepared to act as a guarantor for mortgage seekers who are only able to put down a small amount of money as a deposit.

Again, this has severely hit the property rental market and many of those who were formerly tenants are starting to be able to purchase properties. Because of this, it’s crucial that landlords are well covered with rent guarantee insurance from insurance providers such as PropertyQuoteDirect and of course, have some reserves to help cover any potential shortfalls.

The Help-to-Buy scheme is one of a number of measures from the government that has helped to shake up the property market a little. While it’s hard to be precise about what the long-term effects will be, it looks like the market in the UK is going to continue to stay in the balance between landlords and owners, and property demand is still far in excess of supply which is helping to keep the prices steadily going upwards.

As a landlord it’s key to keep an eye on these developments and as the UK General Election gets closer, it’s vital to keep in touch with the news from the property market.

PropertyQuoteDirect is a leading landlord insurance provider who has over 40 years in the industry.

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