Gov thinking behind Help to Buy for only new built

dan_first_time_buyer

Hi All,

Help to Buy is only available for new builds.

Why did Government decide that? Are they trying to encourage young people to buy new builds rather than older properties? Or is it just that offering a loan on a new property is less risky (e.g. smaller chance the property will have issues)? Or is that something else?

Thanks,
Dan

dimbo61

It was a stupid idea dreamed up by the big house builders to drive up the price of new build properties.
Sold to a couple of idiots working in the government and it means that hundreds of thousands of hard working people are getting ripped off by greedy builders
Think £50,000,000 bonus for one CEO.
Hugh shock after 5 years when mortgage jumps by 25% when you start paying the loan and mortgage.
Because mortgage rates have never been this low many buyers can afford to remortgage and take on the loan but it will take years for new builds to increase in value

bouicca21

Absolutely nothing to do with big house building companies being Tory donors.

Norman_Castle

The government thinking was to promote new house building.

AnotherJoe

It's "something else", to get more affordable houses built. Whether it's the best way to do that is another question

kingstreet

It wasn't a new concept!

Shared equity schemes such as FirstBuy and HomeBuy Direct were around for about ten years before HTB Equity Loan so there was some experience of using shared equity to promote increased new home building.

In 2021, the scheme will have regional caps and be limited to FTBs for the final two years of its life.

ethank

A lot of housebuilders stopped building as many houses, so it was to stimulate building.

davidmcn

At least initially, it was to encourage development of the sites bought at pre-crash prices (which developers wouldn't otherwise have found worthwhile building out).

Exodi

It was to encourage house building. Also to clarify the OP as he seems to suggest otherwise; the HTB Equity scheme does not require you to be a 'first time buyer' and therefore is equally available to young and older people.

sal_III

dimbo61 wrote: »

It was a stupid idea dreamed up by the big house builders to drive up the price of new build properties.
Sold to a couple of idiots working in the government and it means that hundreds of thousands of hard working people are getting ripped off by greedy builders
Think £50,000,000 bonus for one CEO.
Hugh shock after 5 years when mortgage jumps by 25% when you start paying the loan and mortgage.
Because mortgage rates have never been this low many buyers can afford to remortgage and take on the loan but it will take years for new builds to increase in value

I agree that HTB EL is largely to benefit huge Developers, but it also helps a lot of people to get on the property ladder at all or like me, do so without compromising location/size etc.

I rented in London for 6 years, total spend on rent for that period was ~£100k. If I wanted to buy in the areas where I lived renting I had 3 choices due to Lender affordability criteria - go for a tiny Victorian 2bed, 1bed flat new/newish build while remaining in the decent primary schools catchment areas and within 1/2 mile of tube/train station. Or go for 3bed decent size, but way out of good schools cathcment areas and 1 mile away from tube/train station. Neither of these is really an option with 5 and 1 y.o. kids.

Queue HTB EL and now we are living in a huge 2bed maisonette, paying less in mortgage repayments+service charge than the rent we were paying. And in 5 years when the interests on the EL kicks in, we will have plenty of options. The most important fact is that instead of throwing away another 100k on rent, we would have repaid abut 70k of the mortgage. How well it will translate in equity build up will depend on property prices in 5 years. But at the very least we are immune to LL whims.

My point is, no matter the fact it was conceived to help Tory chums enrich themselves, or that there are some people "misusing" it or not understanding the intricacies and pit falls. It really genuinely helps some people like me.

caprikid1

HTB , low interest rates and tax breaks are some of the many ways that government is using to prop up the housing market.


Whilst HTB helps buyers get on the property ladder, in theory without the above measures in place the result would be lower prices allowing people to get on the ladder.