Why The Help-To-Buy Scheme
Is Not Bad News For Property Investors!
The Help-To-Buy scheme may not be open to property investors for rental property purchases, but the scheme does have some good points.
From 7th October 2013, first-time buyers and existing property owners are now eligible to buy property with a 5% deposit as part of the new Mortgage Guarantee Help-To-Buy scheme.
The scheme was originally launched for new build properties at the start of 2013, with the resale portion set to launch in January 2014, however lenders can begin writing loans through the Help-To-Buy scheme from October 7th 2013, but they will not be able to purchase the Government guarantee that underpins these mortgage loans until January 2014.
The Help-To-Buy scheme is mainly to encourage purchasing activity from first-time buyers and existing property owners on all resale and new build properties under £600,000 (GBP).
To be eligible to participate in the Help-To-Buy scheme the property being purchased must be the potential buyers’ only property.
This is good news for property investors who are using “flipping” or “flip & refurb”” strategies as they can purchase run down properties, refurbish them cheaply then offer to first-time buyers who will make use of the Help-To-Buy scheme! The scheme provides an exit strategy for property investors enabling them to cash out of the investment!
2013 has already seen a large influx of first-time buyers into the market, many of which have had 20%+ deposits and this has led to an increase in demand and high competition for properties in some regions of the UK.
This new scheme will certainly help more first-time buyers enter the UK property market. Buyers that may not have had access to enough finance to cover larger deposits. This increase in demand from buyers will increase competition for available properties and thus increase the property prices, potentially creating another property bubble, according to some critics.
Property prices will increase due to continued and encouraging market activity and demand does not look likely to diminish any time soon, so NOW really is the time to buy property, because prices are going to continue to increase, for the foreseeable future anyway.
Think of all the equity you can make just by buying now and holding for 1-2 years, or better still, the amount of rental income that can be generated during the time it takes for the property to build up some decent equity.
What are you waiting for?
For a full list of Property – Private Sale Websites or For Sale By Owner Websites – Click Here!
In Brief: Help to Buy
- Available to all residential property buyers, not property investors
- Available on all resale & new build properties up to £600,000
- Requires at least a 5% deposit
- Up to 95% loan to value repayment mortgage
- Increase in property values due to increased market activity
- Excellent incentive to property buyers allows a good exit strategy for property investors / developers
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