The Home Builders Federation has announced that the Government's Help to Buy scheme has helped more than 4,000 people buy homes in the two months since it was launched on the 1st of April 2013.
The scheme is split into two parts, the first being an equity loan scheme which came into effect soon after the Budget was announced, while the second, a mortgage guarantee, will only kick in next January 2014. The equity loan of up to 20%, which helps purchasers buying a new build home priced below £600,000 secure a mortgage with just a 5% deposit, has reportedly got off to a flying start with more than 400 builders across the country registered and on average five hundred buyers a week expressing an interest.
John East, Director of Land & New Homes at KFH, comments: "We’ve experienced a flurry of enquiries related to the Government’s Help to Buy scheme since it was announced, but in spite of this, there appears to currently be relatively little on offer from developers in London to meet this demand.
"While there may still be a few properties to be found on the previous New Buy scheme, they tend to be in the outer fringes of the Capital and perhaps more so in other parts of the UK outside London. It is anticipated that the Help to Buy initiative will be more readily available and utilised in areas outside of London, so it remains to be seen what impact, if any, it will have on purchasers in London and the figures announced unfortunately don't detail the amounts by region."
In contrast to the glowing reports from the HBF, many senior figures across the country have criticised the Help to Buy scheme.
Sir Mervyn King, the outgoing head of the Bank of England reportedly said: "I'm sure that there is no place in the long run for a scheme of this kind. It is a little too close for comfort to a general scheme to guarantee mortgages."
While Albert Edwards of Societe Generale commented that "the policy risked stoking house prices higher even though they were already extremely overvalued." He continued: "UK house prices, and in London most especially, have never been allowed to correct to affordable levels. First time buyers need cheaper homes, not greater availability of debt to inflate house prices even further."
So while the initiative is certainly a positive step towards increasing buyer activity in the property market, we wait with bated breath to see what it effect it specifically has on the London market.