George Osborne is playing a dangerous game with the new Help to Buy London
The government are going to give a hand to struggling homeowners, to get on the first rung of a very un-affordable ladder, by loaning them 40 per cent of a property’s value. The aspiring homeowner themselves need only front a 5 per cent as a deposit, funding the rest through their own mortgage. Sounds like a win win all round.
Although, there is a catch, or two.
For a start it must be a new build property and securing one can be a challenge in itself, what with the high levels of demand for London property and, the abundance of buyers with more money than you at their fingertips, looking to beat you to the punch.
Oh - and the property can’t exceed the £600,000 mark and must be within one of the capital’s boroughs. Unfortunately for these buyers, 13 London boroughs don’t actually offer an average house price under £600k, again another obstacle before you’ve even started.
Call me pessimistic, but it’s all a little too late anyway. The broken back of the UK housing crisis can’t be bodged back together with a few plasters.
Osborne stated the government is determined to help more people realise the dream of owning their own home. But what he forgets to mention is the cost of Stamp Duty, solicitor’s fees and so on. Couple this with the cost of day to day living in the capital where everything is inflated, and it’s a dangerous game to be playing.
By pushing buyers up onto a part of the ladder that they would otherwise be unable to afford, Osborne could be further fuelling an already precarious landscape of homeowners living beyond their means – just to get on the London ladder.
So far Help to Buy has helped just 130,000 UK buyers since 2013, I expect that the London Help to Buy will yield a similarly disappointing harvest.
At the top end of the £600,000 limit buyers will still need £30,000 to qualify for Help to Buy with a 5% deposit. At the very, very bottom rung in Barking and Dagenham, where the average house costs £262,000, they will still need a deposit of at least £13,000 to qualify. Ok the likelihood is that they will probably be somewhere in between, but if a five per cent deposit of £30,000 is supposed to affordable, then I’ll eat my hat… or I would if I wore one.