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Do We Need a Permanent Help to Buy Replacement?

Help to Buy logo web fileThe Help to Buy programme has assisted many people to become homeowners, often for the first time, but the scheme was never intended to be permanent. However, the success of Help to Buy has convinced many people that a new, permanent scheme to help people to become property owners is needed.

A report recently released by mortgage insurance company Genworth is among the calls for a new replacement scheme to be initiated once Help to Buy ends. According to this report, there are still huge numbers of people who would like to become homeowners but who, for various reasons, have not yet been able to do so. Many of these potential buyers have been thinking about buying since before stricter regulations were introduced in 2008, barring them from many mortgages.

The tighter controls on who would be offered a mortgage shut many of these buyers out, particularly through requirements for people to provide larger deposits. Mortgage lenders have been more reluctant to offer mortgages with high loan to value ratios, and they have been charging much more to those customers whose applications have been accepted. Thanks to these kinds of difficulties, the number of first time buyers getting onto the market today remains low compared to historic figures. Genworth estimates that there have been at least 1.8 million aspiring homeowners who have been unable to buy their first homes since 2007.

Although Help to Buy has been focused on helping exactly those buyers who have been closed out of the market because of difficulties raising deposits, there are still many people who have not yet managed to take advantage of the scheme. It is expected that Help to Buy will enable nearly 300,000 first time buyers to become property owners by the end of 2014, but that there will still be another 200,000 people who have been unable to fulfil their dreams of becoming homeowners this year. If these buyers are to make it into their own homes, continued help from a scheme like Help to Buy is needed to enable purchases to be made by people who can only manage a small deposit.

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