In a period characterised by austerity, exertion and an uncertain political-economic climate – the goal of homeownership often remains as an improbable dream for many people.
This has been particularly true in London, where housing prices have become increasingly higher and increasingly out of reach for many people in recent years.
However, recent evidence has emerged to show that in London, the housing market may finally be gaining some momentum after a period of stagnation.
An increase in construction completions and the sales of new homes shows that more and more people are finding ways to make their dreams of home-ownership work, despite being in a time characterised by austerity.
Research from market analysts Molior London revealed that sales of new homes in London have increased by a fifth in the last quarter. This means that 5,684 were sold – the highest number we have seen since the first quarter of 2018.
Options for first-time buyers
For many people who have grown up in the rich cultural hub of music, art and inspiration known as London, moving elsewhere may not seem very tempting.
It is understandable that people want to remain in their home towns, but the likelihood of buying property has become increasingly unlikely, especially for young people whose parents do not own their own homes.
As housing prices have continued to rise year on year, first-time buyers often feel like they are playing a game of catch up when they are trying to save for a mortgage deposit.
If buyers are earning a salary below the mayor of London’s threshold for affordable housing (currently set at £90,000 per household), then they may struggle to get the size of mortgage needed to secure a home.
Fortunately, there are options available for people in this position. The London Help to Buy equity loan provides first time buyers with a loan of up to 40% from the government with only a 5% deposit.
This 40% offer is specific to London, and outside of London, similar schemes exist with a smaller 20% offering. Find out more.
Who is eligible? | Help to Buy
The loan is a low-interest option and is interest-free for the first 5 years. An example of how the Help to Buy loan scheme could work for a buyer would be:
- 55% home payment from mortgage
- 40% government loan offered towards purchase
- 5% deposit saved by buyer
Who can benefit from the scheme?
There are some prerequisites that determine who can use the Help to Buy London government scheme.
- must be a new build
- must be your first (only) home
- can have a purchase price of up to £600,000
- cannot be used for sub-letting after you purchase
The loan must be paid back over 25 years or if the buyer decides to sell the home – whichever comes first.
Although no interested is applied for the first 5 years, from year 6 an interest fee of 1.75% is payable on the loan, which will rise annually by Retail Index Price.
What does this mean for those interested in property development?
This is positive news for property developers, as more options for buyers mean a more saturated market to sell new builds to.
If you are a property developer in South East of England and you are looking to get started on your newest project, our team at Hunter Finance are equipped with a vast knowledge to help you on your journey.
Our experience is not restricted to property development, and we are experts in the housing market whether you intend on building a single-use home or a commercial build.
Unlike banks, we lend our own funds, meaning we are more willing to take risks when we see potential in those who are looking for a loan. At Hunter Finance we can offer loans from £100,000 to £2,500,000.
If you are interested in finding out how we can help fund your dream project, get in contact today on 01825 749721 or enquire online.
Do you want to see examples of properties we have financed?
- New Home Build – London
- Terrace Property Development in Hemel Hempstead
- Semi-Detached Development in Bexley Heath