The Help to Buy mortgage guarantee, which was launched in October 2013, is set to close in December.
Since its launch, the government-backed scheme has seen over 86,000 completions, nearly four-in-five of which have been by first-time buyers. The highest number of these were in the North West, Scotland, South East and East of England.
So what does its closure mean for first-time buyers like myself? Well, there will still be other similar schemes to help us get on the property ladder, namely: equity loans on new builds; Help to Buy Isas; and shared ownership, the latter of which I’ve looked into. But just how helpful are these schemes anyway?
Well, if you’re looking into shared ownership in the current London market, as I was, not very.
Shared ownership explained
There is no way I can afford to buy a property outright in London, so I thought this scheme would help me.
I was encouraged by the fact that shared ownership properties are sold through housing associations and you buy a stake of between 25% and 75% of the property, using a deposit and a mortgage. To be eligible, you have to earn less than £80,000, or £90,000, if buying in London. You then pay a subsidised rent on the portion of the home you don’t own and a mortgage on the rest.
So far, so good. But then I signed up for daily email alerts, which show properties available to buy through the scheme, and soon found it just wasn’t doable.
The majority of the flats I was emailed had an average starting price of £350,000, up to an eye-watering £750,000. Most were incredibly small and poky, with bedrooms that could barely squeeze in a double bed, let alone a bedside table or wardrobe.
Despite the fact the scheme is designed to help first-time buyers like myself and that I fit all the required criteria, the sky-high rent (subsidised, my foot!), mortgage repayments, plus the monthly service charge on the properties I viewed online, meant I couldn’t afford to make use of the scheme.
Even without factoring in bills or travel expenses (or, dare I be so bold, a social life), I would have been stretched to the absolute limit and would have probably got into debt in the process.
I know London house prices are among the highest in the country, but if I can’t take advantage of the scheme, despite having a much higher-than-average deposit saved up, there must be countless others who are struggling to make use of it, too?
Of course, I could move out of London, but things don’t seem to be much more affordable in the commuter belt, which is probably why there’s a growing trend for Londoners to move out as far afield as Birmingham, Bristol and Manchester.
For now, though, I think I’m better off renting in London and continuing to save.
Has shared ownership worked for you? What about the government’s other Help to Buy schemes? What more can be done to help first-time buyers?