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Is Help to Buy Helping?

Written By On 05/10/2013

The Prime Minister's good intentions to start the next phase of the Help to Buy scheme three months earlier than originally planned seems to have caused more questions than answers.

David Cameron's announcement earlier in the week was meant to give house buyers more confidence in the property market, but seems to have had an adverse effect for many and caused more confusion.

Santander conducted a survey that shows one in ten people across Britain hope to purchase a new property within the next year, with approximately one in three of them intending to buy with the scheme. Indeed if their numbers are correct, and this is a fair indication of the UK as a whole, then property purchases would surely multiply many times over.

There appears to be uncertainty as to which phase would be more beneficial to choose in order to make the most of the Help to Buy. The first phase of the scheme, which was launched last April was loan equity and the second one will guarantee the mortgage loan amount.

Many possible lenders who hoped to participate in the scheme have become very cautious as they await explanations and clear guidelines from the government. Applicants wishing to utilise the scheme still await interest rate quotes from the lenders.

Even house builders are not comprehending the scheme completely. Some have been reported to be misguided. Apparently they presume that a prospective purchaser using Help to Buy for a loan, will not be entitled to negotiate a better deal because their lenders will not permit it. However, this is not the case.

The data over the past few months shows quite categorically that more people are taking out loans to buy property which in turn showing more properties being bought and sold. But some experts believe that this can only cause an excess of demand as supply cannot possibly keep up.

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