David Cameron has revealed that the government is to launch the second phase of its Help to Buy scheme three months early. The scheme, which aims to help buyers purchase any home worth up to £600,000 with just a five per cent deposit, was not due to be launched until January but this has now been brought forwards in an effort to help young people get on the housing ladder as soon as possible. Sarah Rushbrook, Managing Director of Rushbrook & Rathbone gives her reaction to the announcement and thoughts on what impact it might have on the rental market.
“The ‘Help to Buy’ scheme is great news for those struggling to get on the property ladder or take that next step to upsize, it is also good news for estate agents as it will bolster the already improving housing market.
However, this could mean a significant change in the whole market. The biggest group of potential beneficiaries are those who are currently renting and who might now have the chance to buy without the need for a large deposit. So called ‘second steppers’, who don’t have enough equity in their current home for a deposit on a larger home, could also find their chances of moving up the ladder are greatly improved.
As a result, it could reduce demand for rented property to some extent. A lot of the new buyers are likely to be people currently renting. For many tenants, particularly in this area, rent is higher than the equivalent mortgage payments, so many would be able to afford a mortgage if they could get one. With that said, there has been a shift in culture over the last few years and many young people also enjoy the freedom and social aspect that comes with renting.
Traditionally, the two markets do not perform well in tandem, one usually suffers at the hand of the other and that is why those agents that provide both services are in the strongest position. It’s possible, for a time, we could see a balancing out period where both markets do sit alongside one another comfortably but whilst I don’t think the rental market will ‘crash’ as such, this may well just take the bubble out of the market.”