Autumn Statement 2015: London first-time buyers get Help to Buy boost
First time buyers in London will see their prospects of stepping onto the housing ladder boosted by the launch of a new London Help to Buy Scheme.
The Chancellor said Londoners with a 5% deposit will be able to get an interest-free loan for up to five years, worth up to 40% of the property’s value. The scheme will apply only to new-build properties worth up to £600,000, so up to £240,000 can be borrowed interest-free.
The scheme could open up home ownership opportunities in the capital, bridging the gap between average prices and earnings in London.
Adrian Anderson, director of mortgage broker Anderson Harris, explained: ‘’Take the example of a one-bed flat in Camberwell on the market at £360,000. A 5% deposit works out at £18,000 but if you don’t buy via Help to Buy, you then need to raise a mortgage for the remainder, which requires earnings of circa £85,000, pricing out many buyers.
“Under London Help to Buy, a 40% interest-free loan would be available, leaving you with a mortgage of just £198,000 to raise. This could be done with an income of £50,000, which is much more achievable in the capital.
Osborne also confirmed the nationwide Help to Buy equity loan scheme will be extended to 2021, and overall some £20 billion will be committed to housing in this spending period.
First time buyer purchases increased by 60% between 2010 and 2014, according to the Office of Budgetary Resposibility.