Confusion over Help to Buy scheme


Dreaming of buying one of those colorful iconic San Francisco row houses. For Sale sign is visible in front.

One third of people planning to take their first step on the property ladder in the coming months say they are confused about how the new phase of the Government's flagship Help to Buy scheme works, research by a property website has found.

Some 34% of would-be first-time buyers surveyed by Rightmove said they do not understand the new phase of the Help to Buy scheme, which was launched in October to offer state-backed mortgages to people with deposits as low as 5%.

In total, 29% of those who told the website they intend to buy a home in the next 12 months said they will be first-time buyers, marking the highest proportion it has recorded in more than three years as the property market continues to gather pace.

Some housing market pundits have put the confusion over Help to Buy down to the fact that two schemes which work very differently have been launched under the Help to Buy banner.
The first is an equity loan scheme, which is also aimed at people with small deposits but it can be used only for new-build homes. But the new mortgage-guarantee phase of the scheme can be used on either old or new properties. Both schemes are open to both first-time buyers and home movers.

While the Help to Buy equity loan scheme is devolved, with countries within the UK introducing their own slightly different versions of it, the new phase of the scheme which launched in October is UK-wide.

Rightmove's research, which was conducted over the second half of October among 44,000 people, found that even among those first-time buyers who claimed to understand the new phase of Help to Buy, nearly one quarter (23%) wrongly thought the scheme can be used only for new-build properties and one third (34%) believed it was just an extension of the equity loan scheme.

Meanwhile, two fifths (42%) of home movers wrongly thought the second phase of the scheme was only for first-time buyers.

Miles Shipside, director of Rightmove, said: "There's clearly a lot more that still needs to be done to make sure the maximum number of people who could benefit directly from the scheme or its knock-on effects can do so.

"To give first-time buyers more of a chance to get on the property ladder, and help give potential movers higher up the chain the confidence to move again, the confusion needs to be addressed."

Rightmove has created a checklist to explain the differences between the two schemes. The first set of answers are for the mortgage guarantee scheme (phase two) and the second set are for the equity loan scheme (phase one):

Can the scheme be used for...

:: Pre-owned properties, Yes, No

:: New-build properties, Yes, Yes

:: First-time buyers, Yes, Yes

:: Current home owners, Yes, Yes

:: Buy-to-let investments No, No

:: Properties up to £600,000, Yes, Yes in England - and the scheme will cover properties worth up to £400,000 in Scotland and £300,000 in Wales.

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