The latest phase of the Government’s controversial Help to Buy scheme – which starts today – will provide a major boost to the North East economy, although is unlikely to create a false housing bubble in this region.
That is according to the Darlington office of property and surveying firm Smiths Gore, which believes the newly launched second stage of the Help to Buy scheme will have a hugely positive impact on the North East housing market.
The Help to Buy scheme initially launched in April offering homebuyers equity loans of up to 20% of the price of a new build property worth up to £600,000.
Under phase two of the scheme – which launches today, three months earlier than previously planned – the Government will underwrite 15% of the value of a mortgage, enabling people to buy with just a 5% deposit for second hand homes.
Despite some analysts warning that the new arrangement could overheat the market and create a price boom, Smiths Gore associate Patrick Moseley believes the North East market will benefit from it.
“The new version of the scheme could have a huge impact on the North East housing market,” he said. “The vast majority of homes in the region are under £600,000, meaning that a significant amount of purchasers will be looking to buy homes that are eligible for the scheme.
“Whilst there is much talk of a London housing bubble, there is no sign of such a bubble in the North East and any stimulus to get the market moving, particularly in the second hand home market, is a welcome one.
“If those initial purchasers in sales chains are able to take advantage of the scheme then the knock on flow of money should filter through the market. The scheme may also give people thinking of selling their home the confidence to put it on the market, as they will recognise the increased availability of lending, therefore spurring the market on further.”
Moseley also believes measures put in place to monitor the scheme and the fact that the Bank of England has the power to withdraw it, have increased the likelihood of it helping, rather than hindering, the market.
He also predicts increased activity at Smiths Gore on the back of the second phase of the scheme.
“We would hope to benefit from the probable increased activity in the second hand housing market. We have already noticed an increased interest and value gain in development land from the first portion of the scheme and hope to see a similar effect on the second hand housing market now.
“We’ll be suggesting to our clients that they take advantage of the scheme if they wish, as it is an option to secure funding, which remains a significant problem for purchasers.”
Smiths Gore is a rural property consultancy of chartered surveyors which opened in Darlington in 1863 and now employs 25 people in the town, turning over £1.4m annually from the Darlington office.
Since its inception as a purely land management practice, the firm has diversified, offering many areas of specialism including architecture and building surveying, planning and development, rural commercial property and private property consultancy.
For more information visit: www.smithsgore.co.uk