Assistance program to buyers of homes in the UK “Help to Buy”

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The new program of the UK government, designed to lend to new property buyers in the UK or to improve their living conditions, aimed to stimulate the market the UK real estate and construction industry in the UK, of course, will stimulate the market, but not to the extent as expected by the government – to such conclusion analysts of leading the UK’s largest estate Agency Savills .

Savills believes that recently announced by the UK government programme “Help to Buy” could facilitate the conditions of purchase about 400,000 customers, which is 25% less than the official estimate, but she will not be able to provide the residential property market in the UK nor sustainable to inflation in housing prices nor significantly reduce demand for rental residential real estate.

Two fundamental principles underpin the program “Help to Buy” – the equity loan + guarantee of mortgage lending, should have a greater impact on the number of transactions and help great people become home buyers than the previous scheme called “First Buy” and “Buy New” in the first place, because the scheme “Help to Buy” is open to all – not just for those who are buying property for the first time.

Assessment Savills, the program “Help to Buy” will help to purchase a residential property in the UK 400000 buyers over the next three years, including 75,000 purchases in new buildings.

Of course, it is somewhat lower than 550000 deals announced by the government in March when he was declared the new program, but the program will allow to increase the annual number of transactions in residential real estate in the UK by 14% compared to 2012 and could lead to an increase in the number of private sector building by a third. The program “Help to Buy” will do much more to stimulate the real estate market in the UK and help potential buyers than previous government initiatives. But still, in the program there are limitations – limited capacity of buyers and restrictions imposed by lenders. Despite the fact that in theory, buyers in the program “Help to Buy” should have only a 5 % Deposit of property value, most likely, additional costs will require the buyer not less than 10% of the Deposit. In addition, borrowers must be able to withstand all conditions of credit and pass all tests to obtain a mortgage loan.

Some experts argue that the expansion of access to rights of ownership of housing and the decline in mortgage load can create unsustainable inflation in housing prices. On the other hand, the price increase should be limited to unavailable its high price and slow pace of economic recovery.

On expectations of analysts Savills, expected growth in property prices of 11.5% in the next five years can now be changed and to reach 15.3 percent by the end of 2017, but in any case, this is a rather modest increase, especially considering inflation.

It should be noted that the program “Help to Buy” will have minimal impact on the growing rental housing market. About 40% of buyers under the program “Help to Buy” will be first-time buyers buy homes, presumably this is about 160,000 people, making the first steps towards property ownership. But the number of people living in rented accommodation will continue to be very high.

Due to the fact that the key issue of the real estate market in the UK is the rising number of rented accommodation, the actual looks another programme of the UK government – “Build to Rent” – which will help builders to invest in homes that are for rent. This program is of great importance from the point of view of satisfaction of fundamental needs of the housing market in the UK.

® Helen Entree. 12.05.2013