It was pitched as a way to help people unable to afford a deposit to buy their own home.
The help to buy scheme is a leading government policy the prime minister says will assist first time buyers getting onto the housing ladder. It is aimed at those on an average wage who would not be able to afford the deposit on a house.
“We’re more likely to be able to afford the property…” – Claire Williams, first time buyer
Help to Buy means anybody in the UK can put down a 5% deposit on a property worth up to £600,000 and apply for a government backed loan for the rest of the deposit. People can borrow up to 20% of the value of the property.
Claire Williams – First time home buyer
Opponents say the shortfall in houses to purchase and inadequate checks and measures on the long term impact of the scheme could be disastrous, however.
“People will find themselves suddenly unable to pay their mortgages…” – Sarah O’Connor – Nottingham City Council Economics Analyst
With people taking out larger mortgages backed by the government there is the concern that if interest rates rise even slightly, people’s monthly repayments will increase beyond what they can afford to repay.
Sarah O’Connor – Economics Analyst, Nottingham City Council
There is also a concern that the shortage of houses available to buy will cause housing prices to spike, something which the government are keen to avoid. 2014 has already seen some housing price increases, with a 9.2% rise in February and an 8% rise in March.
Bank of England governor Mark Carney has warned that rising house prices are one of the greatest risks to Britain’s economy.
Labour have proposed a ‘Help to Build’ scheme to give small and medium-sized builders more access to financial help to incentivise house building.