The government’s flagship policy to help first-time buyers is all but useless in the country’s capital city, according to an estate agents, as statistics show less than 3 per cent of homes are cheap enough to qualify.
Help to Buy – a state-backed shared ownership and equity loan policy launched in 2013 - was intended help those who could afford mortgage repayments but lacked a substantial deposit, with the government covering 40 per cent of a new build worth up to £600,000.
However, figures from estate agents James Pendleton showed a quarter of London’s 32 borough’s have no houses that fall under the threshold. The agency said only 2.7 per cent of new build houses in the capital are valued below the £600,000 mark.
While eight have no houses available for the policy, three boroughs only had three each and two boroughs only four. There are over 13,000 new build houses in London for sale for more than £600,000 and only 603 below. The estate agents said first time buyers in London were being forced to look further afield, or downsize expectations.
Lucy Pendleton, founder of James Pendleton, said: “We know that house prices are overinflated in parts of the capital, but this really highlights the scale of London’s property crisis for families. A quarter of the capital is off limits.
“Mass extinction of Help To Buy houses has begun, exacerbated by the upper threshold which hasn’t moved in four years, and contagion across the rest of London is inevitable.”
The government policy has grown in controversy since being launched by then-chancellor George Osborne. While the policy in London has always a higher threshold than the rest of the country, the city’s house prices have grown significantly in the last four years. According to the official figures, the average house price in London has risen from £405,000 in January 2013 to £481,000 – a rise of 18.8 per cent.
The latest figures come after James Pendleton also warned on a squeeze on the market. In July the firm highlighted that four fifths of new builds were being deliberately priced just below the £600,000 threshold. The firm said this would have the double effect of pushing up house prices and creating a vacuum in properties selling just above £600,000.
In addition, the government’s own data showed a large number of Help-to-Buy purchases were being made by buyers earning over £100,000 a year – adding to criticisms that the main beneficiaries of the scheme have not been those struggling to get on the housing ladder, but housebuilders, who have seen profits soar after its introduction.
This came after the government announced it was allocating a further £10bn into the initiative with the aim of getting another 135,000 people on the property ladder.