Posted on 30th March 2013

More Hope for First Time Buyers in Help to Buy Scheme

Martin Williamson, Head of Residential PropertyIt was good news for first-time buyers, struggling to save up the average £26,500 needed for a deposit, in the recent Budget. They will now be given vital help to get on the housing ladder with the introduction of the new Help to Buy Scheme. Proposals were introduced for the £12bn scheme to guarantee up to £130bn worth of mortgages to kick-start the housing market and encourage banks to offer more competitive deals to borrowers with a five per cent deposit.


The scheme, which will provide equity loans and mortgage guarantees to home buyers, certainly has the potential to help a number of people into home ownership. Help to Buys mortgage guarantee scheme could benefit 570,000 borrowers over the three years from its launch next January.

Under the proposals, buyers will only have to save up the minimal five per cent, with the Government underwriting a further 15 per cent of the value as long as the property is worth no more than £600,000. When the buyer secures a mortgage, the Government will guarantee part of the loan with the lender; a plan which aims to give people with smaller deposits access to lower loan-to-value mortgages.


Chancellor George Osborne said the initiative would help families who "cannot begin to afford the large deposits currently needed to get a mortgage at a good interest rate. Help to Buy is the latest in a series of schemes aimed at homebuyers themselves that have been launched by the Coalition to boost the market and follows in the footsteps of NewBuy and FirstBuy.

The UK is in the grip of one of the worst housing crises for decades and has only delivered a fraction of the 300,000 new homes that are needed each year to meet demand. Help to Buy will enable greater access to mortgage finance and will have the knock-on effect of encouraging more house building. However, the fact is we are not building enough homes that people want to live in and are affordable - my definition of affordable, not the Governments. The Government recognises that more needs to be done to support the supply side of the housing market. The chancellor has also announced £225m investment to build 15,000 new affordable homes in England by 2015.


Like NewBuy, Firstbuy and the other similar schemes, the Help to Buy scheme is sound in principal, but it remains to be seen if it can really address the root issues of our flagging housing market.

Please note: This article is intended as guidance only and does not constitute advice, financial or otherwise. No responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by Latimer Hinks. In addition, no responsibility for loss occasioned/costs arising as a result of any act/failure to act on the basis of this article can be accepted by the firm.

Martin Williamson is Head of Residential Property at Latimer Hinks Solicitors in Darlington. Latimer Hinks has a team of around 40 people serving private and corporate clients. For further information: www.latimerhinks.co.ukor call 01325 341500.