This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.theguardian.com/money/2013/oct/04/help-to-buy-scheme-estate-agents-phase-two
The article has changed 5 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Help to Buy sparks surge of interest from would-be buyers, say estate agents | Help to Buy sparks surge of interest from would-be buyers, say estate agents |
| (about 1 month later) | |
| Estate agents are reporting a surge of inquiries from would-be home buyers before next week's launch of the second phase of the government's Help to Buy scheme – which will offer taxpayer-backed loan guarantees but has sparked fears of a new housing bubble. | Estate agents are reporting a surge of inquiries from would-be home buyers before next week's launch of the second phase of the government's Help to Buy scheme – which will offer taxpayer-backed loan guarantees but has sparked fears of a new housing bubble. |
| One in five young adults aged 18-39 say they are more likely to buy a home as a result of the new mortgage guarantee scheme, according to an online survey, while 65% hope to use the scheme to buy their first home or move house within the expected three-year life of the £12bn programme. | One in five young adults aged 18-39 say they are more likely to buy a home as a result of the new mortgage guarantee scheme, according to an online survey, while 65% hope to use the scheme to buy their first home or move house within the expected three-year life of the £12bn programme. |
| Agents said on Friday they had witnessed a rush of calls since the prime minister announced last weekend that the scheme, originally scheduled for a January start, was being brought forward. David Cameron is pressing ahead with the plan despite warnings from economists, the Treasury select committee, the International Monetary Fund and former Bank of England governor Lord King that Help to Buy could push house prices dangerously high. A Halifax survey this week showed prices already up by an average of 6.2%, across the country, over the past year. | Agents said on Friday they had witnessed a rush of calls since the prime minister announced last weekend that the scheme, originally scheduled for a January start, was being brought forward. David Cameron is pressing ahead with the plan despite warnings from economists, the Treasury select committee, the International Monetary Fund and former Bank of England governor Lord King that Help to Buy could push house prices dangerously high. A Halifax survey this week showed prices already up by an average of 6.2%, across the country, over the past year. |
| Help to Buy is aimed at people who can afford mortgage repayments but cannot save enough cash for a deposit of more than 5%. | Help to Buy is aimed at people who can afford mortgage repayments but cannot save enough cash for a deposit of more than 5%. |
| The first part of the scheme, which was announced in the March budget and began in April, has already had an impact on the housing market. It provides government loans of up to 20% of the price of a new-build home (costing up to £600,000) and has prompted a big increase in the number of new house reservations and buyers snapping up homes off-plan – a feature of buoyant markets not seen since 2008. Some major building firms have reported shortages of bricks and bricklayers. | The first part of the scheme, which was announced in the March budget and began in April, has already had an impact on the housing market. It provides government loans of up to 20% of the price of a new-build home (costing up to £600,000) and has prompted a big increase in the number of new house reservations and buyers snapping up homes off-plan – a feature of buoyant markets not seen since 2008. Some major building firms have reported shortages of bricks and bricklayers. |
| Phase two of the scheme applies to all homes, not just new-builds. Buyers again have to put down a deposit of just 5%, and the government will guarantee the next 15% of the mortgage, providing compensation to the lender up to that level if the borrower defaults in the first seven years of the loan. The lender will pay a fee for the government guarantee, but it reduces the risks associated with lending. | Phase two of the scheme applies to all homes, not just new-builds. Buyers again have to put down a deposit of just 5%, and the government will guarantee the next 15% of the mortgage, providing compensation to the lender up to that level if the borrower defaults in the first seven years of the loan. The lender will pay a fee for the government guarantee, but it reduces the risks associated with lending. |
| So far, only a handful of lenders have committed to offering these loans, and details of what mortgages will cost and who will be able to secure them are still thin on the ground, but it seems borrowers are keen to take advantage. | So far, only a handful of lenders have committed to offering these loans, and details of what mortgages will cost and who will be able to secure them are still thin on the ground, but it seems borrowers are keen to take advantage. |
| Russell Jervis, managing director of the estate agency chain Haart, said branches were expecting a very active weekend with people coming in to find out more. Jervis said the market was already unseasonably busy. He added: "What we need now is for those people who have been waiting to move to their second homes to act so there are properties for first-time buyers to move into." | Russell Jervis, managing director of the estate agency chain Haart, said branches were expecting a very active weekend with people coming in to find out more. Jervis said the market was already unseasonably busy. He added: "What we need now is for those people who have been waiting to move to their second homes to act so there are properties for first-time buyers to move into." |
| Jamie Lester, owner of west London estate agents Haus Properties, said it had been an "incredible week". Lester said Haus Properties was marketing a development this weekend with flats starting at £500,000 which could qualify for the mortgage guarantee. He said: "We have a lot of would-be buyers who have decent salaries and can afford the monthly repayments but are struggling to get a deposit together. They are phoning and saying they plan to use Help to Buy." | Jamie Lester, owner of west London estate agents Haus Properties, said it had been an "incredible week". Lester said Haus Properties was marketing a development this weekend with flats starting at £500,000 which could qualify for the mortgage guarantee. He said: "We have a lot of would-be buyers who have decent salaries and can afford the monthly repayments but are struggling to get a deposit together. They are phoning and saying they plan to use Help to Buy." |
| As an agent representing sellers, Lester said he had to make sure a buyer had finance in place before recommending an offer. "The vendor just wants the money to land in their bank account on the day of completion but it's still unclear when Help to Buy money will actually be available," he said. | As an agent representing sellers, Lester said he had to make sure a buyer had finance in place before recommending an offer. "The vendor just wants the money to land in their bank account on the day of completion but it's still unclear when Help to Buy money will actually be available," he said. |
| In parts of the country where the market is not quite so heated, agents said they expected buyers to take their time. Stuart Flint, a partner at Fisher German which has offices across the Midlands, said there had not been a surge in interest from buyers, but the early start to the scheme did seem to have increased confidence. | In parts of the country where the market is not quite so heated, agents said they expected buyers to take their time. Stuart Flint, a partner at Fisher German which has offices across the Midlands, said there had not been a surge in interest from buyers, but the early start to the scheme did seem to have increased confidence. |
| Many potential buyers seem to be still in the dark about the scheme. The Mortgage Advice Bureau, which ran the online survey about the second phase of Help to Buy, also discovered that only 36% of 18- to 39-year-olds were aware it existed. | Many potential buyers seem to be still in the dark about the scheme. The Mortgage Advice Bureau, which ran the online survey about the second phase of Help to Buy, also discovered that only 36% of 18- to 39-year-olds were aware it existed. |
| Ministers have claimed the mortgage guarantee scheme could assist more than 500,000 buyers over three years. However, research suggests that this still may not satisfy demand. | Ministers have claimed the mortgage guarantee scheme could assist more than 500,000 buyers over three years. However, research suggests that this still may not satisfy demand. |
| Case studies 'This will only drive up prices, and make life harder' | Case studies 'This will only drive up prices, and make life harder' |
| Louise Doherty and her partner, Chris Hampton, are among the thousands of couples hoping to benefit from the second phase of Help to Buy. But the 27-year-old says she finds herself in the odd position of "being excited about it personally but disagreeing with it in principle". | Louise Doherty and her partner, Chris Hampton, are among the thousands of couples hoping to benefit from the second phase of Help to Buy. But the 27-year-old says she finds herself in the odd position of "being excited about it personally but disagreeing with it in principle". |
| Doherty says that during the past few months, she and 28-year-old Chris "have been frantically turning our life upside down to get a deposit together". When Help to Buy was announced in the March budget they didn't hang around - they handed in their notice on the property they were renting and moved in with her parents in Farnham, Surrey, so they could channel all their efforts into saving up a decent deposit. | Doherty says that during the past few months, she and 28-year-old Chris "have been frantically turning our life upside down to get a deposit together". When Help to Buy was announced in the March budget they didn't hang around - they handed in their notice on the property they were renting and moved in with her parents in Farnham, Surrey, so they could channel all their efforts into saving up a decent deposit. |
| "We're not economists or property experts, but as soon as we heard about Help to Buy, we knew lots of people would want to take advantage of it – and that's only going to do one thing to house prices," says Doherty, a freelance social media marketing consultant who works in London. "We've been struggling to get a deposit together as it is, but knowing this scheme would push house prices up even further in the near future focused out minds. We decided we'd be better to get in early before prices have gone up too much, rather than wait until they have gone up and the deposit we will need is even bigger." | "We're not economists or property experts, but as soon as we heard about Help to Buy, we knew lots of people would want to take advantage of it – and that's only going to do one thing to house prices," says Doherty, a freelance social media marketing consultant who works in London. "We've been struggling to get a deposit together as it is, but knowing this scheme would push house prices up even further in the near future focused out minds. We decided we'd be better to get in early before prices have gone up too much, rather than wait until they have gone up and the deposit we will need is even bigger." |
| Doherty thinks that as a policy, Help to Buy is a bad idea. "We feel our hand is being forced by the scheme. So, despite disagreeing with it in principle, we feel that if we don't go for it, everyone else will – and then we will personally be in a worse position. So we have little choice." | Doherty thinks that as a policy, Help to Buy is a bad idea. "We feel our hand is being forced by the scheme. So, despite disagreeing with it in principle, we feel that if we don't go for it, everyone else will – and then we will personally be in a worse position. So we have little choice." |
| She adds: "London house prices don't need to be any higher! Nor the south-east where we are. I don't feel like they've really thought it all through. It's been announced with little detail, and the devil is always in the detail." | She adds: "London house prices don't need to be any higher! Nor the south-east where we are. I don't feel like they've really thought it all through. It's been announced with little detail, and the devil is always in the detail." |
| She says they would love to be able to buy in Farnham, but it may prove to be out of their price bracket. "We may not end up buying in Farnham. We definitely couldn't afford to without Help to Buy." One of the areas yet to be clarified is how lenders will cater for self-employed people such as Doherty, whose partner works as an account manager in Portchester, Hampshire. | She says they would love to be able to buy in Farnham, but it may prove to be out of their price bracket. "We may not end up buying in Farnham. We definitely couldn't afford to without Help to Buy." One of the areas yet to be clarified is how lenders will cater for self-employed people such as Doherty, whose partner works as an account manager in Portchester, Hampshire. |
| Help to Buy isn't just for first-time buyers. It is also open to existing homeowners looking to move up the property ladder. Shane Kennedy and his wife, Patchara, live in a two-up, two-down in Allenton, Derby, with their young family, and want to move to a bigger property. They bought their home in 2004 and although it has increased in value, so has everything else, and they are struggling to raise a large enough deposit to trade up. Shane, 39, who works in the motor industry, says he and his wife, a canteen cook, could be described as a "striving, hard-working people", but although Help to Buy could reduce the deposit they need to move, he thinks it may actually make it harder for them. | Help to Buy isn't just for first-time buyers. It is also open to existing homeowners looking to move up the property ladder. Shane Kennedy and his wife, Patchara, live in a two-up, two-down in Allenton, Derby, with their young family, and want to move to a bigger property. They bought their home in 2004 and although it has increased in value, so has everything else, and they are struggling to raise a large enough deposit to trade up. Shane, 39, who works in the motor industry, says he and his wife, a canteen cook, could be described as a "striving, hard-working people", but although Help to Buy could reduce the deposit they need to move, he thinks it may actually make it harder for them. |
| "We've been looking for around three years and working on building up a deposit. We have found a few suitable properties – three-bedroom semis with a back garden in reasonable areas with reasonable schools. No unrealistic expectations here – we're looking at a £150,000 purchase price," he says. | "We've been looking for around three years and working on building up a deposit. We have found a few suitable properties – three-bedroom semis with a back garden in reasonable areas with reasonable schools. No unrealistic expectations here – we're looking at a £150,000 purchase price," he says. |
| However, a few things have prevented them from taking the plunge: "The level of debt required to purchase what would be considered a 'normal house' is high, and the repayments will eat a considerable amount of income, leaving no room for saving or contingency plans. There is also a lot of cost associated with moving to a bigger home." | However, a few things have prevented them from taking the plunge: "The level of debt required to purchase what would be considered a 'normal house' is high, and the repayments will eat a considerable amount of income, leaving no room for saving or contingency plans. There is also a lot of cost associated with moving to a bigger home." |
| He is also concerned about taking on a lot of debt when interest rates are low. | He is also concerned about taking on a lot of debt when interest rates are low. |
| "[Help to Buy] does not help because it now puts properties I have been saving a deposit for within the price range of others who have saved less. The chances are that it may mean prices are pushed up, meaning I will get even less for my money. It does not address any of the things that have stopped us buying – all it does is increase pressure on the demand side."It shocked me somewhat that the policy was brought forward as it seemed rather rushed and badly planned. Nobody seemed clear about what the practicalities were. The scheme has meant I will be even more cautious and wait to see what the unexpected consequences are." | "[Help to Buy] does not help because it now puts properties I have been saving a deposit for within the price range of others who have saved less. The chances are that it may mean prices are pushed up, meaning I will get even less for my money. It does not address any of the things that have stopped us buying – all it does is increase pressure on the demand side."It shocked me somewhat that the policy was brought forward as it seemed rather rushed and badly planned. Nobody seemed clear about what the practicalities were. The scheme has meant I will be even more cautious and wait to see what the unexpected consequences are." |
| Our editors' picks for the day's top news and commentary delivered to your inbox each morning. | Our editors' picks for the day's top news and commentary delivered to your inbox each morning. |
| Top mortgages | Top mortgages |
| HSBC | HSBC |
| HSBC | |
| HSBC | HSBC |
| Provided by London & Country for the Guardian | Provided by London & Country for the Guardian |