Help to Buy could work, despite criticism
A leading property expert has suggested the government’s Help to Buy scheme could give the 65% of North East renters unable to save for a deposit the help they need to get a first foot on the property ladder –despite widespread criticism of the scheme.
Unveiled during the Budget, Help to Buy is a government-backed project designed to help people purchase properties with deposits as low as 5%
The International Monetary Fund this week became the latest organisation to express concerns about the scheme, warning the policy could “work against the aim of boosting access to housing”
Earlier this week outgoing Bank of England governor Mervyn King stated that he believed Help to Buy has “no place in the long run“.
Ajay Jagota of North East lettings agency KIS Lettings, who manage properties for almost 700 landlords from branches in South Shields, Sunderland, North Shields and Welwyn Garden City believes could help the 42% of “trapped renters”, who would like buy their own home but are unable to save enough money while also stimulating the economy.
He said: “There is no question that Help to Buy is a gamble on the government’s part, but gambles can pay off.
“Certainly my initial reaction to the scheme was a certain incredulity that the government seemed to be suggesting that the road to recovery was to give mortgages to people who can’t afford to pay them back, which was what got us into this mess in the first place.
“It would appear on closer inspection that Help to Buy is more of an insurance policy, with the government underwriting rather than offering loans. This encourages lenders to lend – which is vital – while leaving the government’s exposure minimal assuming lenders assess the applications they receive sensibly.
“Mervyn King’s point is that Help to Buy cannot be a long-term policy, and he’s undoubtedly right. If correctly managed, however, the scheme could provide a short-term catalyst for a housing-led recovery, while offering much needed help to Generation Rent, including the 65% of renters in the North East who are unable to save a penny towards a deposit for a property of their own, despite it being shown to be renters their number one priority in a recent survey.
“42% of renters would like to buy but are currently unable to – the government needs to help them. As every recent recession has been ended by a housing-led recovery, the government may be helping themselves too.”
This was posted in Bdaily's Members' News section by Ajay Jagota .
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