Mail Online UK: Homebuyers offered GBP240k interest-free loan to purchase new-build property under London Help to Buy scheme
Wed 25 Nov 2015
Interest-free loans of up to 240,000 will offered to people struggling to buy a new home in the capital.
The London Help to Buy scheme will double the loan size available elsewhere to 40 per cent of equity. Buyers willstill need a 5 per cent deposit, but will only need to apply for a mortgage covering the remaining 55 per cent.
In his Autumn Statement, George Osborne said the loans were aimed at helping to 'address the housing crisis inour capital'.
George Osborne says the new London Help to Buy scheme will address the housing crisis in our capital
It comes just weeks after house price data showed the average price of a home in London is just 3 shy of500,000. It means many properties are out of reach for those on average salaries.
The new London Help to Buy scheme is an extension of the Help to Buy Equity Loan scheme that is currentlyavailable in England (Wales and Scotland have their own versions).
The original version offers an equity loan of 20 per cent and is available to both first-time buyers and
homemovers looking to buy a new build property up to a maximum purchase price of 600,000.
The Help to Buy scheme was first introduced by the Government in April 2013 and has been extended until 2021.
Experts welcomed the the latest reincarnation of the scheme designed for London, saying it make a 'hugedifference' to those seeking to get onto the property ladder in the capital.
Mark Hayward, managing director of the National Association of Estate Agents, said: 'The introduction of theLondon Help to Buy initiative is a step in the right direction.'
Adrian Anderson, director of mortgage brokers Anderson Harris, said: 'Help to Buy has been hugely successfulacross the country but hasn't had such a big impact in the capital because property prices are that much higher.Offering a 40 per cent interest-free loan to London buyers will make a huge difference, enabling many to get onthe housing ladder when they simply couldn't before.
Buying a one bedroom flat in Camberwell costing 360,000 without the use of the Help to Buy scheme wouldrequire a 5 per cent deposit of 18,000 and a mortgage for the remainder - something that would require aborrower to have an annual salary of 85,000.
However, with the new London Help to Buy scheme, it means a 40 per cent interest-free loan would be available,leaving a mortgage of a much smaller 198,000.
This amount could be sought with an income of 50,000, which experts describe as 'much more achievable' inthe capital.
Peter Rollings, chief executive of Marsh & Parsons, said: 'The London housing market is a law unto itself, and it'sencouraging to see the Government recognise the added affordability pressures at work in the capital, and tacklethese with a designated London Help to Buy scheme.
'With rumours that interest rates might rise earlier than expected, this will inject renewed confidence and shouldhelp thousands of prospective homeowners realise their aspirations of getting on the property ladder.'