This Is Money: Homebuyers offered #240k 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 be offered to people struggling to buy a new home in the capital. TheLondon Help to Buy scheme will double the loan size available elsewhere to 40 per cent of equity - so buyers willstill need a 5 per cent deposit, but will only need to apply for a mortgage covering the remaining 55 per cent. Inhis Autumn Statement, George Osborne said the loans were aimed at helping to 'address the housing crisis in ourcapital'. It comes just weeks after house price data showed the average price of a home in London is just 3 shyof 500,000. It means many properties are out of reach for those on average salaries. The London scheme is anextension of the Help to Buy Equity Loan scheme that is currently available 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-timebuyers and homemovers looking to buy a new build property up to a maximum purchase price of 600,000. TheHelp 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. It will be available to those buyingproperties within Greater London, which covers all London boroughs, including the City of London. MarkHayward, managing director of the National Association of Estate Agents, said: 'The introduction of the LondonHelp to Buy initiative is a step in the right direction.' Adrian Anderson, director of mortgage brokers AndersonHarris, said: 'Help to Buy has been hugely successful across the country but hasn't had such a big impact in thecapital because property prices are that much higher. Offering a 40 per cent interest-free loan to London buyerswill make a huge difference, enabling many to get on the 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 40per cent interest-free loan would be available, leaving a mortgage of a much smaller 198,000. This amountcould be sought with an income of 50,000, which experts describe as 'much more achievable' in the 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 tackle
these with a designated London Help to Buy scheme. 'With rumours that interest rates might rise earlier thanexpected, this will inject renewed confidence and should help thousands of prospective homeowners realise theiraspirations of getting on the propertyladder.'