The Help to Buy measure introduced by Chancellor George Osborne in the 2013 Budget could potentially boost second-home ownership, even though it’s been designed to help struggling buyers put a foot on the property ladder.
The package consists of two schemes that bridge the gap bet-ween the mortgage deposits people can realistically afford and the larger sums often required by commercial lenders.
The first scheme, open to buyers of newly built homes who can put together a minimum deposit of 5%, allows them to raise an additional 20% of the property’s value through a shared equity loan from the Government. They would then have to secure the remaining 75% through a commercial lender. The loan, available from this month, is interest-free for the first five years and must be repaid by the time the property is resold.
Under the second scheme, which launches in January 2014 and is available for both new and resale homes, the Government will partly underwrite high loan-to-value mortgages. To be eligible, buyers need to raise a deposit of between 5% and 20% of a property’s value, and secure a mortgage for the rest. Lenders will then have the option to buy the Government’s guarantee for up to 15% of the mortgage value.
Both schemes, which will run for three years, are open to all purchasers-not just first-time buyers-provided that they’re buying a UK property that’s worth no more than £600,000 through a residential repayment mortgage (not a buy-to-let or an interest-only one).
The move has generally been welcomed by the property ind-ustry, but the Labour Party has pointed out that buyers could exploit the mortgage-guarantee scheme-whose details have yet to be clarified-to fund a second-home purchase. Industry experts, such as Stephanie McMahon of Strutt & Parker, agree this is possible: ‘There is a potential for people to use it to access cheaper debt for second homes.’
The risk, adds her colleague Nick Henton, is that ‘the scheme may have the opposite effect to that intended, giving more people the ability to service a mortgage on a second home in hotspots such as Devon and Cornwall, and therefore increasing demand and driving up prices to the detriment of local first-time buyers’. For this reason, ‘the Government will need to be careful in managing how the scheme is utilised for second-home lending, particularly for new homes in popular locations’.
However, Lucian Cook of Savills believes there’s no cause for concern: ‘The Government’s intention is to help first-time buyers and second-steppers. As with all new legislation, there is debate about loopholes and unintended consequences. If the intention behind the Help to Buy scheme is seen to be abused, the legislation will be amended.’
Perfect for… walks in the forest
Hampshire, £750,000 Potters Heron Cottage, Ampfield 4 bedrooms, rural views, 0.75 acre
Fine (01962 826050)
Thought to date from 300 years ago, Potters Heron Cottage has oak beams, cosy fireplaces and a vast farmhouse kitchen with a conservatory that affords far-reaching views across the grounds. The lovely garden borders Forestry Commission land-it’s a short walk from waildflower-carpeted Ampfield Wood.
West Sussex, £725,000
8, Burton House, near Petworth
Smiths Gore (01798 345994)
3-4 bedrooms, parkland views, communal gardens
This large apartment, of more than 2,000sq ft, takes up part of the second and top floors of Grade I-listed Burton House. All the main rooms enjoy panoramic views across Burton Park, an 84-acre expanse of parkland. Residents have access to a formal landscaped garden, tennis courts and croquet lawn.
…the north Cotswolds
Rose Cottage, Snowshill
2 bedrooms, views of the village church, garden
Hayman-Joyce (01386 858510)
Perfectly located in the heart of Snowshill, Grade II-listed Rose Cottage features a beamed sitting room with an inglenook fireplace. Outside, the office in the rear garden overlooks the church.
Perfect for… river views
Oxfordshire, offers in excess of £895,000 Mouseham, Burford
5 bedrooms, river views, gardens
Knight Frank (01865 790077)
Situated on the outskirts of Burford, this Grade II-listed, Cotswold-stone house borders the River Windrush and the main rooms enjoy views across it. The panorama is particularly beautiful from the large master bedroom and from the alfresco dining area in the manicured gardens.
…island living near Glasgow
Argyll & Bute, offers over £450,000
Cullipool House, Isle of Luing
4 bedrooms, sea views, one acre
Savills Glasgow (0141-222 5875)
Cullipool House stands just a few yards from the shore. Once the home of the local quarry manager, it’s been completely renovated in the past five years and is now a beautiful island retreat. The sunroom is especially charming with its vaulted ceiling, patio and extraordinary views across the Sound of Luing to the Ross of Mull.
Devon, £2.95 million Mew Stone East, Salcombe
4-5 bedrooms, estuary views, landscaped gardens
Marchand Petit (01548 844473) and Knight Frank (01392 423111)
Few properties have better views than this newly built house in the centre of Salcombe village, which overlooks The Bag to East Portle-mouth. The best places to soak up the seascape are the open-plan living areas on the second floor and the 21ft terrace.
…working from home on long weekends
Gloucestershire, £850,000 Castle Barn, Leighterton,
4 bedrooms, office, gardens
Strutt & Parker (01285 653101)
Built of Cotswold stone, Grade II-listed Castle Barn is set in the heart of the village of Leighterton. The interiors are classic in style, with a large kitchen. Outside, the four-car garage block has an office on the first floor.
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