Help to Buy only for first time buyers

The government has announced the second stage of the Help to Buy Scheme will not be available to those who already have a home and are looking to purchase a second home. This is mostly likely to be achieved by asking buyers to confirm that they do not have an interest in property elsewhere in the UK.The previous government implement a scheme where first time buyers were exempt from Stamp Duty for properties below £250k.

The Stamp Duty exemption ended in 2012, and was not hailed as a big success. It effectively cut the price of a house by 1% for first time buyers. The new scheme is harder to analyse, as it ought to drive down interest rates the borrowers pay but it will be hard to determine by how much. The scheme is supposed to run for three years. So as a ball park the average saving for first time borrowers will be similar to the stamp duty cut if it saves reduces average rates by more than 0.34%.

The government believes the market for house purchase borrowing is distorted and so they are trying to correct it by taking some of the risk from the banks(the message is slightly mixed as the government are at least claiming their will be strict controls on the creditworthiness of borrowers). This should ensure there is more lending as well as the lending being cheaper. The costs for the government are more interesting. Stamp duty meant the government lost 1% on the price sale of houses, with the new scheme it might lose between 0% and 15%. The aims to support £130 billion of lending, or about 700,000 average houses.