15,000 London renters in Help to Buy stampede

EXCLUSIVE: Thousands rush to sign up for scheme to break free from 'rental trap'
Over 15,000 people applied for the new scheme in its first week
Shaun Curry/AFP/Getty Images

Thousands of frustrated renters have joined a stampede to secure loans from George Osborne’s new London-only homebuying scheme in its first week, the Evening Standard has learned.

The huge response from more than 15,000 first-time buyers desperate to clamber on to the housing ladder is far bigger than expected and comes just seven days after the Help to Buy London initiative was launched.

Mortgage brokers said they had been “deluged” by enquiries from tenants stuck in the “rental trap” and previously unable to save enough cash for a deposit.

The scheme, first announced by the Chancellor in last November’s Autumn Statement, allows buyers with just a five per cent deposit to apply for government equity loans covering up to 40 per cent of the value of a new-build property.

This means they only have to raise a mortgage for 55 per cent of the agreed price.

First-time buyers looking to pay a typical £400,000 asking price will now “only” need to raise a £220,000 mortgage rather than £380,000.

Russell Hall, head of new homes at broker SPF, said: “Demand is expected to be high and we have already had a deluge of provisional enquiries from applicants wanting to know whether they qualify and how the scheme will work.”

Developers across London’s suburbs say they have seen huge levels of interest from young buyers now able to access far more affordable loans with an effective “deposit” of 45 per cent.

A spokesman for housebuilder Barratt London said: “Since the extension of Help to Buy last week, sites across the capital have seen a significant increase in interest from potential buyers.

"The sweet spot is in the outer boroughs and our sites at Catford, Greenwich and Edgware, for example, have seen a surge of interest with buyers looking to buy one or two-bedroom apartments.”

Ian Sutcliffe, group chief executive of developer Countryside, said: “There has been a very strong response to Help to Buy London.

"The new scheme’s popularity reflects the fact that it makes home ownership in London much more attainable and supports buyers far better than the (earlier) nationwide scheme was able to.”

He said the company has received reservation fees on eight new flats from buyers with Help to Buy backing at schemes in Canning Town, Bow, Romford and south Acton.

However, the surge in applications will raise fresh fears that the scheme will further fuel price rises in the suburbs, where they are going up faster than anywhere else in London.

It is only available on new homes in London boroughs and is an extension of the previous national Help to Buy, under which the Government would only provide 20 per cent of the funding. This had low take-up in the capital because of its exceptionally high property prices.

The scheme’s property value cap of £600,000 means that most of the enquiries involve housing developments outside Zones 1 and 2, where even a starter home is likely to cost more than the ceiling.

Shailendra Chaudhari, a business analyst in his “early thirties”, said the scheme would allow him and his wife Samiksha, 27, to break out of renting and secure a two-bedroom flat in Greenwich Millennium Village after a year of fruitless searching.

He said that without the 40 per cent backing “working people like me find it very difficult to buy in London”.

A DCLG spokesman said :“We want to ensure that anyone who works hard and aspires to own their own home has the opportunity to do so.

“London Help to Buy will make a huge difference to those looking to own their own home in the Capital with people able to buy with just a 5 per cent deposit and a 55 per cent mortgage and since its launch we’ve seen over 15,000 expressions of interest in the first week."

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