Five Questions On: Help To Buy

 

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The Independent Online

This is the government scheme to help first-time buyers, isn’t it?

That’s right. The scheme offers up to 20 per cent of the value as government assistance to purchasers buying a new-build home. The buyer must have a cash deposit of at least 5 per cent and a mortgage lender must provide a loan of at least 75 per cent.

Is there a problem with it? 

Critics have suggested the scheme  has helped to fuel rampant house-price inflation. But in a report published this week the Bank of England said the scheme is not driving house prices upwards.

That’s good news, then, isn’t it? 

If you believe the figures. The Bank said “the average house price in the Help to Buy mortgage-guarantee scheme was £153,800, significantly below the national average”.

That’s fair enough, isn’t it?

The problem is the figure is out of date. It was true back in June, according to data published at the beginning of September on which the Bank based its judgement. But the latest government statistics on Help to Buy published this week include data to the end of August. And that shows that the average price in the first 17 months of the scheme was actually £210,269, which is significantly higher than the national average property price of £188,374, according to the Nationwide house-price survey published on Tuesday.

So the scheme is contributing to property inflation?

That’s hard to prove either way. But it doesn’t really seem to be helping most first-time buyers, even though 84 per cent of the 32,268 completed deals went to first-time buyers. That’s because it is being used to buy properties higher than the average. That suggests that more well-off buyers are taking advantage of it, rather than hard-pressed people, which is whom the scheme is really supposed to help.

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