The Scheme is designed to encourage banks and building societies to offer more mortgages to young people who only have a small deposit.
It is anticipated that this will accelerate the housing market with young adults saying that they are more likely to buy a new-built home now that government support is available. However, it has been criticised by those who believe that it will cause house prices to rise due to a sudden high demand for homes.
Research carried out by the property website Zoopla.co.uk has estimated that there are approximately 665,000 properties currently on sale that will be eligible to be included in the Help to Buy Scheme. The research states that with the average asking price being £222,168 outside of London the 5% deposit required would be just £11,108. This would rise to £16,100 in London. This is a fall of £33,000 from the average deposit required to buy a home in England of £44,000.
Lawrence Hall of Zoopla said "House prices are beginning to rise, saving rates are low, inflation is consistently above target and wage increases aren't keeping pace. It makes saving for a 20 per cent deposit on a property very difficult for many. The new scheme ... makes the first rung on the ladder much lower for would-be buyers who want to get a foot on it."
