Already new research suggests that it could reduce deposit requirements by £22.1 billion with 5% deposits making home ownership possible for under £10,000 in six out of 10 regions.
The calculations from property website Zoopla are based on there being 665,000 properties currently on market that are eligible for the scheme with the average asking price of eligible properties currently at £222,168.
The firm says that a 15% reduction in deposit requirements equates to an average saving of £33,325 taking the average deposit to £11,108 but for many it will be under £10,000, depending on geographical location.
For example, an average home on the market in Yorkshire and the Humber can now be bought with a deposit of only £8,129, the lowest level across the country. Before this mortgage guarantee part of Help to Buy, which has been brought forward from its original launch date of January 2014, a 20% deposit in the region would have set an average buyer back £32,518.
The average buyer can now also get on the housing ladder with a deposit of under £10,000 in the North East, the North West, Wales, the West Midlands, the East Midlands and the West Midlands. In London, where house prices are much higher, the scheme will reduce the average deposit requirement by £48,309.
According to Lawrence Hall of Zoopla this phase of Help to Buy won’t just narrow the aspiration gap; it could help close it entirely. ‘House prices are beginning to rise, savings rates are low, inflation is consistently above target and wage increases aren’t keeping pace. It makes saving for a 20% deposit on a property very difficult for many. Even people with well paid jobs are being priced out of the market,’ he explained.
‘The new scheme helps address that problem, making the first rung of the ladder much lower for would-be buyers who want to get a foot on it. People everywhere need help. Help to Buy can make housing market a place for the many, not the few,’ he added.
Peter Rollings, chief executive officer of Marsh & Parsons, believes that will help to stimulate the UK housing market over the short term like a shot of adrenalin. ‘Outside London the market desperately needs this impetus as prices have risen anaemically for some time but in real terms they haven’t risen for a number of years. But in London over the last 12 months we have seen price increases of between 10% to 15%,’ he said.
‘Yet the capital needs this stimulus to free up mid ladder buyers who want to become first time sellers. This will create a much healthier balance between supply and demand and it’s these buyers who need help to meet often stringent lending criteria of the banks,’ he added.
The details of what fees will be payable are expected to be announced this week. Some critics have said that buyers may have to pay higher interest rates to qualify for the scheme.
