First time buyers in the UK are racing to beat the end of year deadline for the Government’s Help to Buy mortgage guarantee scheme with more valuations being carried out in this sector.
In September the number of valuations for first time buyers rose by 18.7% on an annual basis, according to research from Connells Survey and Valuation.
John Bagshaw, corporate services director of Connells Survey & Valuation, believes that they are looking to use the scheme before it closes at the end of December. But he does not think that first time buyer activity will suddenly drop after that.
‘The scheme was introduced with a specific purpose to help people get on the property ladder who were finding it hard to save for a large deposit. There are now more than 30 lenders offering 90% to 95% loans outside Help to Buy so the scheme’s not as important to the market as it was,’ said Bagshaw.
‘And other Help to Buy schemes will continue until 2020, including the five year, interest free equity loans for new build homes and the Help to Buy ISA. On top of that, Chancellor Philip Hammond has said he wants to prioritise spending on new homes and borrow an extra £2 billion to speed up their construction,’ he pointed out.
‘In his conference speech he said he would use all the tools at its disposal to increase the amount of new housing stock, to help make housing more affordable. That should also work out well for first time buyers, too,’ he added.
The data also shows that remortgaging valuation activity rose 14.7% year on year and despite huge turmoil in the buy to let market over the last 12 months, there has been such a large increase in activity in this segment of the market over the last two months that valuations are 0.4% up on last year.
‘Despite a bruising period of Government intervention the buy to let sector has been finding its footing over the last couple of months, recovering from the 3% stamp duty surcharge, the restriction of tax relief on mortgage finance costs to basic rate tax only, and the removal of 10% wear and tear allowance. The Government’s intervention had a significant effect in the short term but we appear to have recovered the lost ground now,’ Bagshaw explained.
However, there has been a slower pattern of activity on behalf of home owners further up the property ladder. Valuations for established home movers have contracted 2.9% over the last 12 months. Overall September has seen the number of all property valuations increase 3.6% compared to the same month last year.
‘Overall the valuation market is in good shape and is continuing to grow,’ added Bagshaw.
