Help to buy scheme extended for new homes until 2020
17/03/2014
House builders have been handed a boost by the government today as the chancellor announced that the first stage of the help to buy scheme will be extended until 2020, allowing a further 120,000 houses to be built.
The first part of the ‘Help to Buy’ scheme is specifically aimed at helping people buy new build homes, and was originally expected to end in 2016.
However, this will now run an extra four years to 2020 in England, with no announcement as of yet about the separate schemes in Scotland and Wales.
However, the second part of the scheme which aims to help people buy any home, rather than just new build homes is still set to finish at the end of December 2016.
Rising Share Prices
In response to the extension of the scheme, shares in house builders on the stock exchange increased by as much as 6%.
The most significantly affected was Persimmon, whose share price increased by more than 6% at one stage. Additionally, Bovis Homes and Taylor Wimpey both experienced increases in their share prices of 4.4% and 3.4% respectively.
Stimulating a housing bubble?
Despite the positive reaction from house builders and the Home Builders Federation (HBF), some critics believe that the move will contribute to a potential housing bubble.
Andrew Sentence, adviser to accountancy firm PricewaterhouseCoopers (PwC) and a former member of the Bank of England’s Monetary Policy Committee (MPC) felt that house prices could soon become out of control. He said that “We're on the threshold - if some of this support for the housing market is not reined in - of a housing bubble."
He also went on to suggest that as prices increase, the prospect of buying a home will soon become “out of reach” for first time buyers, therefore defeating the point of the scheme in the first place.
Need advice?
Are you looking to buy a home through the ‘help to buy’ scheme and need advice? If so as a question to one of our qualified financial advisers by asking a question online or calling 0800 092 1245.
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