Buyers flock to London Help to Buy as enquiries surge
Homebuyers in London have clamoured to register for the government’s London Help to Buy scheme since its launch on 1 February.
Greg Clark, secretary of state for communities and local government, said in the scheme’s first week 15,000 people registered their interest.
Under the terms of the scheme, first or next-time buyers, can purchase a new-build property by contributing a 5% deposit from their own funds while receiving a 40% interest-free government loan for five years, allowing them to take out a mortgage of 55% loan-to-value.
The maximum purchase price for eligible properties is £600,000.
Andy Frankish, new homes director at Mortgage Advice Bureau, said the enquiry numbers were not surprising.
“The scheme has incredibly generous terms so it is no shock that it is generating a lot of interest,” he said. “It may well be that people are just curious to see what they can get and how much it will cost them.”
Frankish said after speaking to a broker, borrowers may find a shared ownership scheme is more affordable for them.
“If the enquiries do proceed to mortgage finance, homebuyers can only choose from new properties. Standing stock of new build is a really big problem,” he added. He said homebuyers were also contending with the ‘stampede’ of investors snapping up properties ahead of the 3% Stamp Duty hike which comes into force in April, putting further pressure on stocks.
Frankish said he didn’t expect to see the majority of purchase completions begin to materialise until the end of year as many of the properties people would be looking at would still be under construction.