Callooh callay, London's own Help to Buy scheme has launched this morning, the government's scheme to give first-time buyers a lift onto the housing ladder.
The new scheme effectively doubles the help being given out previously, as the government makes loans of up to 40 per cent available for first and second-time buyers on new build properties worth up to £600,000. Previously, they received loans of 20 per cent.
The scheme allows Londoners to buy a home with a five per cent deposit and a mortgage as low as 55 per cent.
Chancellor George Osborne said the scheme had been extended to provide "an even better deal in the capital, where buying a home remains out of reach for too many".
But not everyone applauded the move, with some firms warning it still only helps those earning substantially more than the average salary.
Lawrence Hall, spokesman for Zoopla, said: "With the average property value in London currently standing £637,298 and the scheme only applying to new build properties with a value of up to £600,000, buyers will have to look hard for an affordable London home.
"Zoopla calculations show that to make the most of the top price bracket property, a buyer would need to be earning a substantial £73,000 a year more than double the average London salary of around £35,000 to qualify for the mortgage of £330k, even with the government lending you 40 per cent. For a lower purchase price of £350k, buyers would still need a higher than average salary of £43,000 for a mortgage of £192,500.
"While the scheme extension is a move in the right direction, one has to question whether it’s benefiting London’s higher earners, rather than those who need it most.”
Russell Quirk, founder and chief executive of Emoov, said: "Given that this translates to a deposit of £25,000 on the average London house price, I can’t imagine it will help too many who are struggling to get on the ladder in the first place.
"Yes the wage on offer in London may exceed that of the rest of the nation, but so does the cost of living and so the requirement of £25,000 could really be too much to ask for many. There are other options to helping those that can’t get on the property ladder."
Adam Challis, head of residential research at JLL, noted that the scheme had originally been set up to revive the house building sector after the crash, “but that time period has come and gone”.
“My concern with an expanded Help to Buy programme is that it creates an artificial prop to the market, to the demand side," he told The Telegraph. "That, ultimately, is levering a proportion of the population into home ownership that, through no fault of their own, can’t afford it otherwise.”
Lucian Cook, head of residential research at Savills, added: "Buyers will have to think not just about what happens just now, in a period of very low interest rates, but what happens in five years time, when not only are the interest rates up but they incur the 1.25pc charge on the equity loan.
“Against that context, how will the lenders account for that in their calculations when they work out how much debt is going to be made available?"