It was reported on Jeremy Vines radio 2 show, a little guilty pleasure of mine, that the Help to Buy scheme is being exploited by people who could afford the deposit in the first place. It reported that nearly a fifth of those who had used Help to Buy are not first time buyers. And that a typical household using Help to Buy had a household income of £44,000, compared to the national average £25,000.
I had not managed to totally remember all those statistics from the radio report. This article here was incredibly helpful.
(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site)
But if you cannot be bothered to read all those statistics, I want to speak about why and how Help to Buy is being used for what it was not meant for.
If you don’t know the Help to Buy scheme we have written blog here explaining it.
I feel this is happening because of two reasons. The first reason is what is stipulated on the article, that developers are using Help to Buy as a way to drive up the price on houses so they can get a higher price per unit. It’s all pretty nasty, but as they know that people have the option for Help to Buy and the government has set aside the cash to help people get onto the property ladder. But the developers understanding that the Government will give others up to 20% of the deposit. Means they bid more for the land, and therefore need to get more for it. So what does it result in. Higher price on houses, and therefore the people who need houses can’t afford them.
Secondly, is something a little more natural, and this is just, my feelings for it. Is that it is a good deal, with some areas, still growing in value for houses. So if you get a new house you may be in for a good investment, and if the government help you with a deposit (which acts as kind of a loan), then it can mean you get onto the property ladder, with a new house and the potential for it to really grow into something worth a lot in the future. But it really is a risk. And should not be done lightly.
It is a shame that people are abusing the system to get a better lift onto the property ladder. The idea is to bring more house into the market and help the availability of property for young families or couples looking for a hand to owning their home.
But the scheme is still there for now and it is still available if you feel you need it, but if you don’t then its always better to have paid your own deposit. It means it is your money that is placed in the property and it means no surprise payments when the “Help to Buy” tenure lapses.
As always, speak to someone you trust get the right advice so you can make the right decisions for you.
Your home may be repossessed if you do not keep up repayments on your mortgage.