Help to Buy

Over the weekend I read a number of articles on the Government’s Help to Buy Scheme with the commentators advising that lenders are not reducing their rates as part of the Scheme.  I think the articles are misguided as the point of the Help to Buy Scheme is not to reduce the cost of borrowing, but is in fact to make borrowing at higher loan to value more readily available.  I think lenders are being very sensible in not making the cost of this too cheap but I hope that it is on the proviso that when interest rates start rising – 2015 to 2017? – mortgage payments on the Help to Buy Scheme do not rise as quickly.

On another note –  the Help to Buy Scheme has also been criticised for not tackling the problem of the lack of supply of new properties in the UK housing market.  Again I think this criticism is not justified.  Until the Banks are satisfied that the residential property market and values have stabilised, they will not be prepared to lend to developers of all sizes.  I think a positive consequence of the Help to Buy Scheme is that the housing market will stabilise and lenders will be more confident in lending money to developers thus increasing the supply of new properties coming onto the market.  I will report further on this in due course.

PS.  Whilst I welcome all assistance to the housing market, I think the Scottish Government’s version of the Help to Buy Scheme hasn’t gone far enough – it only helps first time buyers purchasing new build properties.  I wish that they had done more analysis in terms of the numbers of first time buyers in Scotland that actually buy a new build property – in my experience, very few – if any!  I hope that they revisit their scheme and open it up to all properties and all buyers.

Lindsay Darroch
Partner & Head of Property

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