By Karelia Scott-Daniels, Managing Director of buying agents Manse & Garret Property Search
The Help to Buy scheme’s interest free shared-equity loans will be a boon for people looking to buy in areas where the property market is strong.
While anything that encourages would-be owners to take the plunge and become first time buyers is welcome, there is a risk that the scheme may lead some into paying the inflated prices that are often demanded for new-build properties.
In many areas of the country, new build properties have shown a worrying tendency to lose value quickly, and it can take them as much as five years to appreciate in any noticeable way.
First time buyers are rightly seen as the key to the property market as a whole. But for them to give a lasting boost the market, they need to generate equity in their first home. Renovating an older property is the most obvious and efficient way to do this, meaning that new builds are rarely the best choice for a first-time purchase.
I would have preferred the Chancellor to scrap VAT on renovations done by homeowners, and offer help to those bringing an empty building back into use.
However, buying new-build isn’t always a bad move. We have clients who have bought new-build properties that went on to double in value in 5 years. But these were all in prime central London where the market is driven by overseas investors — this pattern is rarely repeated elsewhere.
The Help to Buy scheme will increase competition for new build property and give a much-needed boost to the struggling construction industry, but it is far from a panacea for the property market, and should come with a serious health warning for first-time buyers.
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