Whilst growth in UK house prices slumped over the past 12 months, property values remained significantly higher in the Capital than anywhere else in the country.
Recent Land Registry figures also show that London house prices continued to increase by 2.5% in 2017 and with the average London property selling for around £615,500, getting a foot on the housing ladder still looks to be a challenging prospect.
What is Help to Buy?
Launched on April 1, 2013 and available until 2020, Help to Buy is a government scheme that helps prospective owners with a minimum of 5% deposit purchase a property with the help of a 20% equity loan. Open to both first time buyers and existing homeowners, purchasers will not pay fees on the loan for the first five years of owning their home.
With many mortgage lenders asking for upwards of 10% in order to lend, the Help to Buy scheme makes home ownership much more feasible for those with a small deposit.
How does it work?
With the a 5% existing buyer deposit, 20% government loan and 75% regular mortgage, the Help to Buy scheme enables London buyers to meet the purchase demands of this property market.
Help to Buy London
The Help to Buy scheme was adjusted for buyers in London to help support the cost of London living. From 1 February 2016 the government revised the upper limit of the Help to Buy scheme for London buyers, increasing the amount available as a government equity loan from 20% to 40%.
So, for buyers with a 5% deposit a mortgage of 55% of the purchase price is required – significantly less than the 75% that would have been necessary before the equity loan amount was increased. This increase in help available is advantageous for those looking to buy in many ways:
It should be easier to obtain a mortgage as the amount required from a mortgage provider will be lower
In London, Help to Buy is available on properties up to the value of £600,000 – a higher limit than elsewhere in the UK to reflect the more valuable property market
London buyers can buy sooner with less time spent saving before getting a roof over their heads
Because of the conditions of Help to Buy scheme, mortgages will always be affordable alongside the other costs of London living