4th November 2014

Help to Buy Scheme

Apologies for the length of time since the last blog which has been caused by pressure of work and holidays.  I will give you my summer update on the property market shortly.  In the meantime I have been interested to read reports regarding the Help to Buy Scheme.

The Scottish Government Scheme has run out of money and lenders are now pulling away from the UK supported Help to Buy Scheme.  The influential economic body the OECD has now called for the Scheme to be brought under control with a new lower limit on lending.  The OECD would like this Scheme to be scrapped altogether.

Whilst I agree that there needs to be some tightening up of the criteria I am against the Scheme being withdrawn altogether at this stage.  I do think that the UK property prices are being distorted by the London property market – UK property rose 10.5% in the past 4 months compared to 20.1% in London.  It also has to be noted that in London most properties are purchased without mortgages or at least with very low loan to value mortgages and thus any property bubble that is happening in London will have little or no impact on the banks should it burst.

I do think that there is a struggle for first time buyers to get on the market and as I have argued before first time buyers are the life blood of the property market in particular and the whole economy in general.  I also feel that whilst matters have improved there still needs to be more support for developers both via funding and planning controls to increase the number of properties that are being built.

In conclusion my opinion is that the Government should continue with the Help to Buy Scheme but perhaps restrict it geographically to areas outwith London and also put a cap on the price of transactions that would be supported.

Summer update to follow.

Lindsay Darroch
Partner – Head of Property



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