Government ‘Help to buy’ scheme explained

In the last few weeks the second phase of the Help to Buy scheme has been launched, three months ahead of schedule and taking even Lenders by surprise. For those still not sure what this scheme entails, it is a Government guarantee to the lender of up to 15% of a property purchase, allowing a buyer, as long as they meet the lending criteria, to raise a 95% mortgage. It is available for purchases up to £600,000 and restricted to owner occupiers.
This scheme is controversial, mainly because it is a manufactured crutch to a property market that is no longer limping.  . We are just coming out of the worst sustained period of activity in generations, and are witnessing a gentle and manageable market-led recovery, but purely for the sake of political timing during conference season, so the argument goes, the coalition has decided to provide direct assistance to encourage buyers even further. The worry for many is that in delivering this stimulus the Government has crossed the Rubicon from assistive enablers to direct meddlers in what is an unforgiving market.
The general cry is that control needs to be established by Government, the Bank of England and through Lenders’ self-regulation in order for demand not to get too carried away. Likely? We can only wait and see, but judging by recent brush-offs the coalition isn’t particularly worried about countering the monster that some fear it might have created .
The initial equity based assistance has proved to be a great stimulus across the UK at the lower end of the market, but whether Help to Buy will impact on our local market remains to be seen and it will be difficult to separate the impact of this initiative from a general improvement in market conditions unless, of course, it becomes evident from property professionals that there has been a huge uptake.
The main point to be made is that a healthy property market is one of sustained activity rather than surging prices and as long as there is a decent supply of available stock this should prevail over the sort of inflation that we saw in the pre-crunch days.
Whatever happens, Help to Buy is here for the next few years and at least it is a positive move, which after recent times is a welcome gesture.