First time buyers rush to take advantage of Help to Buy

Following the announcement that the government is to scrap the Help to Buy mortgage guarantee there has been a significant rise in the number of valuations for first time buyers, writes Poole-based property developer Richard Carr.

Deadline

First time buyers - Richard Carr

First time buyers rush to take advantage of Help to Buy mortgage

The mortgage guarantee ends at the year and the number of first time buyers requesting valuations has rising sharply since Chancellor Philip Hammond’s announcement.

According to Connells Survey and Valuation, the number of valuations for first time buyers rose by 18.7% in September on an annual basis.

John Bagshaw of Connells Survey & Valuation believes that many first time buyers are aiming to use the scheme before it closes at the end of December, however he doesn’t think first time buyer activity will suddenly drop at the start of 2017.

Richard Carr hopes that the government are able to benefit first time buyers by building more homes as a result of removing the Help to Buy mortgage guarantee.

Spending

Philip Hammond is planning to use the money saved to build more homes, as Bagshaw explained to propertywire.com:

“The scheme was introduced with a specific purpose to help people get on the property ladder who were finding it hard to save for a large deposit. There are now more than 30 lenders offering 90% to 95% loans outside Help to Buy so the scheme’s not as important to the market as it was.

“And other Help to Buy schemes will continue until 2020, including the five year, interest free equity loans for new build homes and the Help to Buy ISA. On top of that, Chancellor Philip Hammond has said he wants to prioritise spending on new homes and borrow an extra £2 billion to speed up their construction.

“In his conference speech he said he would use all the tools at its disposal to increase the amount of new housing stock, to help make housing more affordable. That should also work out well for first time buyers, too.”

Buy to let

Some experts fear that first time buyers will turn to the rental market, which will assist that current turn around that the buy to let market is experiencing.

Despite 3% stamp duty surcharges, the restriction of tax relief on mortgage finance costs to basic tax only and the removal of 10% wear and tear allowance, the sector has performed strongly in the last two months.