The government has rushed forward the controversial second stage of the Help to Buy scheme by three months and will launch the scheme later this week.
The "mortgage guarantee" stage of Help to Buy, which will extend the low-cost government equity loan to people buying existing properties as well as new-builds, was due to start in January.
But on the eve of the Conservative Party conference, Prime Minister David Cameron made the surprise announcement that the government was going to introduce the scheme three months early.
Lenders RBS/NatWest have welcomed the accelerated launch and announced that they would take part, with the aim of helping 25,500 first and next-time buyers through the scheme.
Help to Buy will allow people with a deposit of just 5% to buy properties worth up to £600,000.
Cameron told the Sun on Sunday that he was keen to help young people get on the housing ladder: "The need is now. I have always wanted this to come in and frankly the earlier the better.
"What concerns me is that you can't buy a house or a flat even if you are doing OK, you have got decent job prospects and good earnings.
"I am not prepared to be a prime minister of a country with caps on aspiration."
Shadow Chancellor Ed Balls said: "Rising demand for housing must be matched with rising supply, but under this government house building is at its lowest level since the 1920s.
"Unless David Cameron acts now to build more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder.
"You can't deal with the cost of living crisis without building more homes, so it's no wonder that for millions of families this is no recovery at all."
Last week, the Treasury announced that the Bank of England's Financial Policy Committee would review the Help to Buy mortgage guarantee scheme every September, in a move welcomed by many in the industry.
CML director general Paul Smee said: "Lenders need a predictable operating environment to participate effectively in the Help to Buy scheme. We now have an indication of how and when the Bank of England will determine whether the scheme needs to change during its three-year proposed lifespan, and this annual review will be a key deciding factor in that.
"We hope that there will also soon be clarity on issues such as the government's exit strategy at the end of the scheme."
Jeremy Blackburn, head of policy at the RICS, said: "The range of measures announced under the Help to Buy scheme to kick start the housing market were much needed. However, RICS have cautioned that Phase 2 in particular, extending the scheme in January 2014 to include lending on second hand homes, could increase risk of a ‘bubble’ particularly in London and parts of the South East.
"This is why we recently called for a discussion on the possible use of ‘speed bumps’ for the housing market including curbing excessive house price inflation. RICS also called for a concise and clear exit strategy for Help to Buy.
"We are pleased by George Osborne’s announcement today if it helps to moderate the highs and lows of the property market and ensure fair access for all. Additionally, the Bank of England is reported as promising to ‘closely monitor’ the housing market and intervene if it feels there is danger of a house price bubble. Ultimately though, housing supply is crucial to a healthy market."
Help to Buy has now been extended to Scotland, in a move welcomed by brokers. Ian McGrail, managing director of broker FirstMortgage, said: “This comes as a great relief to us as we will now be able to deal with the escalating demand from first-time buyers.
"The surge in employment opportunities in some of our major cities has made Scotland an increasingly attractive option for first time buyers, as our branches have reported enquiries are now at a record high.
"It is our sincere hope that the second phase of the scheme will also be introduced in the weeks ahead to ensure that those who still cannot be helped by Help to Buy 1 still have a chance of becoming a homeowner."
Nationwide has started to accept Help to Buy applications in Scotland.
Comments