Help to Buy Equity Loans are already open to both first-time buyers and home movers on new build homes in England with a purchase price up to £600,000.
Currently, if you are able to pay at least 5 per cent the value of your home as a deposit, the government will lend you up to 20 per cent of the rest of the value of the property, alongside your mortgage of up to 75 per cent.
The equity loan will now be available until 2021.
To reflect the current property market in London, from early 2016 the government will increase the upper limit for the equity loan it gives new buyers within Greater London from 20 per cent to 40 per cent.
With London Help to Buy equity loan borrowers will need to contribute at least 5 per cent of the property price as a deposit and the government will give a loan for up to 40 per cent of the price.
You would therefore need to secure a mortgage for your client of up to 55 per cent to cover the rest.
It is vital that any adviser with clients who want to use this scheme are aware Help to Buy London comes with caveats.
Simon Checkley, managing director of mortgage broker Private Finance, says it is important to bear in mind that those who qualify for Help to Buy London may not sublet the home.
Potential property purchasers who wish to use this scheme also cannot own any other property at the time of purchase, Mr Checkley adds.
But Andrew Bridges, managing director of estate agent Stirling Ackroyd, says what is very important about the scheme is it a recognition from the Conservative government of the exceptional factors facing Londoners.
Mr Bridges says Help to Buy London should be seen as “a credible starting point”.
Private Finance’s Mr Checkley agrees that the great thing about this scheme is it shows the Conservative government elected last year recognises there is a problem with people getting their first foot on the London property ladder.
He says: “The introduction of the London Help to Buy scheme is evidence of the fact that the chancellor has now listened to the advice of industry experts who have called for the scheme to be adapted on a region by region basis for some time past”.
But experts we spoke to also remarked that if the government thinks Help to Buy London will solve all the problems of those struggling to buy in London, then it is sorely mistaken.
Stirling Ackroyd’s Mr Bridges says there are some serious flaws to the government’s latest scheme too and these should be flagged when dealing with clients excited about Help to Buy London.
Firstly, Mr Bridges says the loan is only available on properties up to the value of £600,000 – which rules out a chunk of the capital.