Help to Buy Scheme

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The Official Launch of the "Help to Buy Scheme" was deemed to demonstrate the benefit of the scheme in helping to reignite the London UK Housing Market.

For those without comedic tastes, the so-called experts at Wikipedia think they have an article about Help to Buy Scheme.

The "Help To Buy Scheme", officially called the "Help to Sell Scheme" is a housing policy in the United Kingdom, by the coalition government to address the issue of lower house prices since the global financial crisis, which is seen as a threat to the London UK economy.

edit Historical Perspective

House prices fell after 2008 due to the absence of sub-prime mortgages which were available to everybody and anybody, regardless of income. The end to the era of over borrowing reduced demand for houses as it meant many people could no longer borrow more than they could afford. The coalition government introduced "Help To Sell" in order to fill the market gap which sub-prime mortgages once occupied. Many homeowners during financial crisis, who bought during the market peak in 2007, are now in negative equity, this is why the scheme has also been nicknamed "The Generational Bailout" as a new generation of first time buyers enables older home owners to sell there houses for more than they could have done before.

edit How it Works

The Scheme uses government money to fund a buyers housing deposit, which they will pay back at no specific time, allowing the buyer to buy a more expensive home without the need to spend time saving for a larger mortgage deposit. This also allows buyers to qualify for a mortgage that they would not otherwise be able to obtain, under normal market conditions. This in turn fuels the demand for housing and drives up house prices.

Under normal market conditions a seller maybe forced to lower there price to a more affordable level as low/middle income people, in the United Kingdom, have recently been priced out of the market. In that scenario a potential seller would make less money from a sale, otherwise be forced not to sell at all. "Help to Sell" prevents this as the buyers borrowing potential and mortgage deposit is above what it would normally be.

edit Opposition to the Scheme

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Some question the quality of the Housing Market outside of the Greater London area.

The scheme was opposed by David Cameron's conservative Government. As Britain's centre right wing party, they are advocates of the free market, and are therefore against any inference/market fixing using tax payers money. Chancellor George Osborne said it went against all conservative party Principals. Conservative backbenchers have said that sellers should not be given a free ride using government funds to create demand for them. David Cameron also said in a message to home owners, that "buying during the peak of a housing bubble was your decision and negative equity is the consequence of poor speculation. The tax payer should not be responsible for bailing you out when we have more pressing concerns."

Despite strong conservative opposition the policy could not be blocked due to overwhelming support from there liberal democrat partners in the coalition government, as well as the opposition labour party. The house of commons voted overwhelmingly in favour. Only a conservative majority in the 2015 election would put the conservatives in a position to terminate the scheme.

edit See Also

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