New Bank of Mum & Dad: The Government!

It’s been just over a year since the government launched the ‘Help to Buy’ scheme.  The idea surrounding it was that it would help first-time buyers get on to the property ladder and encourage building.  So a year on … is it creating the boom and bust effect the sceptics were worried about? Apparently not. 
The Help to Buy scheme makes it possible for a potential home buyer to secure a 20% loan on the cost of their new-build home from the government, meaning that they only need to raise a 5% deposit and a 75% mortgage.
The latest figures published by LSL Property Services suggest that first-time buyer sales are at their highest since August 2007, climbing to 31,400 in March this year  (source: and it has been suggested that this rise is due to the Help to Buy scheme.  Another possible effect that could be attributed, is that on average, first-time buyer deposits fell 10% in the last 12 months to just £23,802, representing 66% of the average income, lower than the 77% recorded last year.  (source:
David Newnes, director of estate agents Your Move and Reeds Rains, part of LSL Property Services group, said: “The number of first-time buyers has returned to a pre-recession high, just in time for the one year anniversary of Help to Buy. More first-time buyers are seizing the opportunity to have a helping hand from the Government in putting together a deposit. Help to Buy has allowed the bottom of the market to stay buoyant, despite property prices increasing”.   (source:
Purchase prices for first-time buyers has also increased by 6% on average, however, due to  declining mortgage rates, mortgage repayments have remained relatively unmoved.  Despite an increase in purchase prices, the first-time buyer transactions are continually increasing as higher loan to value lending grows.  

David Newnes added “The bank of Mum and Dad is no longer the only go-to cash reserve for aspiring home-owners. Parents have seen their savings diminished by inflation and low interest rates. The government is stepping in to fill that void and help first-time buyers struggling to save for a deposit to get onto the ladder.  There is an added benefit too. Extending the equity loan scheme will encourage more first-time buyers to opt for new builds. This goes some way to guarantee future demand for home-builders, thus encouraging them to develop more new projects. Even so, the scale of the home-building revival must be up-scaled, in order to give the next generation of would-be first-time buyers a fair opportunity to buy their own home”.  (source:

So, despite the initial scepticism of those who predicted that these schemes could lead to a boom and bust effect on house prices, it seems all this is looking quite positive for those wanting to purchase their first home.  This in turn has apparently led to an increased confidence within the construction industry which surely can only have a positive effect on the economy overall? Time will continue to tell. 
LegalinX-7Sideâ„¢ have been working with the UK’s legal communities for over 30 years, for more information visit .
Do NOT follow this link or you will be banned from the site!