George Osborne has announced that the scheme is set to be extended for an additional four years due to its success, meaning it will now end in 2020 rather than 2016. This extension will see a further £6bn injected into the scheme and potentially 120,000 more properties built.
Who will benefit from the Help to Buy scheme extension?
The Help to Buy scheme has been introduced to support the long-term economic plans put in place by the government, and to help those buying and building residential properties.
With a Help to Buy equity loan, buyers only need a 5% deposit as opposed to the 10% deposit that people are usually expected to contribute. Buyers are required to take out a mortgage of up to 75%, where the difference is made up by an equity loan from the government.
In particular, the scheme has been introduced and extended to benefit the following home buyers:
•Low income households
•First time buyers
•Younger home buyers
With the Help to Buy scheme being extended to 2020, it could help even more people to get their first foot on the property ladder.
Statistics show that 400,000 homes have been built since 2010, and a large proportion of these new builds have been sold using the scheme.
However, experts are concerned that this growth has not been enough. The Office of National Statistics has released figures showing that house prices have risen at their fastest rate in almost four years, with the average price of a house now standing at around £250,000. It has been suggested that the Help to Buy scheme may have caused a surge in demand from buyers in areas of the UK where there isn't enough supply, pushing homes even further out of people's reach.
New data from the Mortgage Advice Bureau has also found that the annual growth on new build prices has dropped from 4% to 2% over the last year. This indicates that while new houses are being developed, which those using the Help to Buy scheme can afford, enough simply haven't been built.
With an additional £6bn being injected into the scheme between 2016 and 2020, this could provide housing developers with a further incentive and greater confidence to develop more new homes in the near future.
By making sure that enough houses are being built to support the rising demand brought about by the Help to Buy scheme, this could put a stop to any future increases in house prices and mortgage rates that could prevent people the scheme intended to help from being able to buy homes.