Help to Buy scheme may boost
UK property prices
but may not be much use
to first time buyers
The controversial Government incentive scheme “Help to Buy” set for launch on 1st January 2014 is designed to aid first time buyers with property purchases and in turn this incentive could boost the UK residential property sales market without being of any real use to first-time buyers.
Morgan Stanley have issued a forecast that UK residential property prices are expected to increase between 8% and 13% before the end of 2014 and the bank reckons that its forecast is “supported by government policy”.
The investment bank’s prediction follows a warning by the Organisation for Economic Co-operation and Development (OECD) which says that the Help to Buy scheme offering 95% mortgages, due to launch in January 2014, could pump up UK residential property prices but would not necessarily increase the supply of available residential property.
From 1st January 2014, under the new government incentive, taxpayers will be underwriting up to £130 Billion (GBP) worth of mortgage debt and mortgage lenders will be encouraged to lend a higher proportion of 95% mortgages because of the indemnity.
Morgan Stanley also predict that profits at Lloyds, the UK’s biggest mortgage lender, could soar by £1.17 Billion (GBP) because of the Help to Buy mortgage scheme and profits at UK banks could receive an overall boost of somewhere between £1.81 Billion (GBP).
With UK property prices widely tipped to continue increasing, albeit slowly, and a lack of available properties on the market, there really is no better time for property investors to get into the market in order to profit.
Tenant demand for rental property remains strong and many lettings and property management agents are struggling to cope with the unprecedented demand for suitable properties, often reporting as many as 10 tenants chasing a single tenancy within the UK private rented sector (PRS). This means that investors who make use of a buy and hold strategy for property investment are able to maximise healthy rental yields, without having to break into a sweat, or break the bank.
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