Britain’s biggest mortgage lender is slashing the amount it will advance through Help to Buy, as a think-tank called for the scheme to be wound up.
Lloyds Banking Group, whose brands include Halifax and Lloyds Bank, said it would only advance loans of up to £150,000 under the equity loan part of the scheme, down from the previous limit of £500,000.
The cap applies to all shared equity and shared ownership loans, including Help to Buy, but it will not affect advances made through the mortgage guarantee part of the Government’s scheme.
The new Lloyds’ limit is significantly below the average value of a property bought through the scheme of £207,967.
The cap is likely to be a particular blow for buyers in London and the South East, where the average home costs £437,608 and £228,109 respectively, according to figures from the Land Registry.
Lloyds said one in four of the Help to Buy mortgages it has previously advanced was for more than £150,000, but it stressed that it remained committed to helping first-time buyers.
The news came as the head of the Organisation for Economic Co-operation and Development called for the Government to start winding down the scheme before it distorted the UK’s housing market.
Angel Gurria, the OECD’s secretary-general, also called on Chancellor George Osborne to lower the house price limit for the scheme to the national average of £262,000.
“It was a good idea and it worked. Now the economy is back on track. The price of houses has gone double digit. Do you still really need the mechanism? You need to think about moving towards normality before distortions set in,” Mr Gurria said in an interview with the Times.
He added that the scheme should be wound down over the course of the coming year.
The Help to Buy scheme enables people to purchase a home with a deposit of just 5 per cent.
The Government then either tops this up with up to 20 per cent of the property’s value, known as an equity loan, or it will offer lenders advancing high loan-to-value mortgages a guarantee on a portion of the debt.
But the scheme has not been without controversy, with some critics claiming it has contributed to a house price bubble.
Lloyds is the second lender to announce curbs on the lending it will do under Help to Buy.
Earlier this year, Nationwide said it would no longer advance mortgages to people buying a new build property under the scheme if they were not first time buyers.
A Lloyds spokesman said: “We have taken the decision to temporarily cap shared equity and shared ownership lending to £150,000.
“This is a prudent, short-term change that reflects the fact that we currently hold around a 50 per cent share of this market and is a further step to focus our activity on supporting first-time buyers who have limited options to get onto the ladder.”
In February, the group committed to helping 80,000 first time buyers get on to the property ladder this year by advancing mortgages worth £10bn to them.
It lent £5.7bn to 44,000 first time buyers during the first six months of 2014.
Around 13 per cent of Lloyds’ lending to first time buyers currently takes place through the Help to Buy mortgage guarantee scheme, which is not impacted by the new cap.
Government figures released last week showed that nearly 40,000 people had received assistance to buy a property through Help to Buy since it was first launched in April last year.
The Bank of England is due to review the scheme next month.
It was once the most popular close on television. And now fans have an opportunity to live in it for real as a property in Brookside Close goes on the market to rent.
The three bedroom property is in Liverpool’s Brookside Close, found in the north west of the city.
The Channel 4 soap opera regularly attracted audiences of more than eight million during its heyday in the 1980s and early 1990s.
It was different from other soap operas of that time as it was filmed in real, brand new homes.
Brookside was conceived by Phil Redmond, who also devised Grange Hill and Hollyoaks. He was particularly keen on buying an entire ‘close’ of houses in an attempt to add to the show’s realism.
Famous storylines included that of the ‘body under the patio’ and the first pre-watershed lesbian kiss on British television between actresses Anna Friel and Nicola Stephenson.
The series began in 1982 and ran for 21 years until November 2003.
The first time buyer is back with a vengeance. The number of people getting on to the property ladder in Britain for the first time is back to 2007 levels, after a long slump during the recession.
The twice-yearly Halifax First Time Buyer Review reported that around 144,500 first time buyers took possession of the keys to a property in the first six months of this year, up 25 per cent on 2013 levels.
Craig McKinlay, mortgages director at the Halifax, cites the generally improving economy, rising employment and the Government’s Help to Buy scheme for their return. He also notes that almost half of this year’s first time buyers managed to escape Stamp Duty by buying under the £125,000 threshold.
Naturally, this is a feat a lot easier if you live in the North West than the South East, but there are thousands of homes listed at prices on or below £125,000 on Zoopla.
Patrick Paton, of estate agents Smiths Gore in Berwick upon Tweed, says buyers could buy a two to three bedroom cottage either within the town or in the countryside around it.
He advises buyers to hone in on properties that have taken time to sell and where the owners might be open to offers. “Look for properties that have been on the market for a little while and haggle,” he said.
He also suggests considering very carefully whether taking on a run-down home makes financial sense. “Doing a property up takes time and eats into spare cash so if the property really needs a new kitchen, you might be better to spread that extra £10,000 across a mortgage by buying a property that already has a nice kitchen,” he added.
Mark Pedley, a sales negotiator at Hunters in Manchester said it is still possible to buy a one bedroom flat right in the city centre for below £125,000 – perfect for young professionals. For those prepared to for a slightly longer walk to work flats in this price range beyond the city’s ring road might also come with extras like a parking space and a balcony.
His advice to buyers is to hone in on an area poised for regeneration, and swoop while prices are rock bottom. In Manchester this could be the central suburb of Ancoats, still slightly grubby around the edges but in a convenient location and the focus for millions of pounds worth of regeneration work right now. “It is the sort of place where you might well make a profit,” said Pedley.
In Thetford, Norfolk, Mark Dickenson, director of Hudson Property Services, says buyers have plenty of choice for under £125,000. They could pick up a one bedroom flat from around £75,000 or a two bedroom flat from around £95,000. The full £125,000 would buy them a two bedroom house in the town centre.
He says buyers looking for a deal should search out areas that have been held back by poor local transport links, but where improvements are imminent. Thetford’s prices are currently low in part because the 33 mile drive along the single carriageway A11 to Cambridge is “horrendous” and can take up to an hour each way.
This winter, however, works to turn the road into a dual carriageway will be completed, slashing journey times by up to half. This, believes Dickenson, will encourage more commuters to look at the town, boosting prices. “My advice would be to get in early,” he said.
For sale for less than £125,000:
1. In Taunton, Somerset your first buy could be small but extremely stylish, not to mention pocket friendly at £53,000. This studio apartment within a grand period house, with use of a good-sized communal garden.
2. A smart two bedroom period cottage in Bolsover, Derbyshire, could be yours for £68,000.
3. First time buyers not afraid of a challenge could pick up a great dooer-upper, a potentially outstanding Georgian Grade II listed double fronted townhouse with scope to extend in Gainsborough, Lincolnshire. The property is on the market for £70,000 so there might even be enough money left to make the necessary repairs.
4. London commuters could opt for a quirky one bedroom weatherboarded cottage in Sandhurst, Kent, available at £124,950.
5. Inland Devon has some great bargains compared to the coast, like this two bedroom terrace in pretty Buckfastleigh, on the market at £120,000.
6. Commuters to Cambridge or Norwich could move to the market town of Thetford, Norfolk, and select a two bedroom house within walking distance of the town centre, for £117,000.
7. But if you want to be in the thick of things The Roof Gardens, a trendy development of flats in the very central Castlefield area of Manchester, are available from £119,000 and will be move in ready next year.
8. Even London buyers can get in on the act, although they are likely to be restricted to outer suburbs and ex-local authority flats, like this one bedroom home in Woolwich, available for £119,995.
Get your swimsuit on, we’re going swimming! There are some amazing homes with outdoor pools in England but we haven’t stopped there, our search has taken us far and wide.
1. We’re mesmerized by this organic looking rock pool.
Four bedrooms, British Virgin Islands, £3.5m – Savills
2. Your eyes aren’t deceiving you, that is a water park in the back garden. This impressive property was once home to Celion Dion and it seems no expense was spared creating this. We’re in heaven.
Thirteen bedrooms, Florida, USA, £36.9m – Sotheby’s
3. Plenty of room to run up and cannonball into this pool!
Six bedrooms, West Sussex, £5.9m – Sotheby’s
4. A tropical oasis with the most idyllic blue water to dive into when you’re finished at the pool.
Three bedrooms, Bermuda, £4.6m – Knight Frank
5. We love this stunning home and it has both outdoor and indoor pools, so when it gets a bit cool just swim on inside.
Eight bedrooms, Suffolk, £2.9m – Jackson-Stops & Staff
6. The colours of this pool lured us in and I don’t think we’d be getting out in a hurry either.
Three bedrooms, Florida, USA, £3.8m – Mayfair
7. We’ve headed to Barbados for this versatile pool area. With two bars it looks like the perfect spot for a pool party.
Ten bedrooms, Barbados, £5.1m – Mayfair
8. The perfect place to sit with a cocktail while keeping a close eye on the kids in the pool.
Six bedrooms, California, USA, £16.2m – Coldwell Banker
9. Fit for a princess – this stunning French palace is set up on the hills above Cannes and provides stunning views of the coast from the pool side.
Twelve bedrooms, France, POA – Knight Frank
10. Look at the view!
Four bedrooms, British Virgin Islands, £1.7m – Knight Frank
New Malden, Barking and Harringay are all being included in plans for a new high speed orbital railway connecting London’s zone three suburbs, it has been revealed.
London mayor Boris Johnson revealed the scheme in his London Infrastructure 2050 plan and predicted more people moving to the east of the capital, suggesting that Barking would become “the next Piccadilly Circus within 100 years time”.
He said about £200bn of spending on transport infrastructure alone would be needed in the capital by 2050 to keep the city moving.
It follows the success of the London Underground, which has helped regenerate areas. But where the Overground connects zone two, the orbital railway will link suburbs in zones three and four – even zone five.
Mr Johnson launched his plan, describing it as “a real wake-up call to the stark needs that face London over the next half century”.
He said: “Without a long-term plan for investment and the political will to implement it, this city will falter. Londoners need to know they will get the homes, water, energy, schools, transport, digital connectivity and better quality of life that they expect.”
About Barking, he said: “This will be Piccadilly Circus here in 100 years’ time.
“Transport infrastructure makes all the difference to the prospects of a community.”
And he reckons 50,000 new homes will need to be built in the capital to meet the needs of Londoners.
He said: “Population growth is unstoppable. You’ve got to go with the grain of how people want to live their lives.
“If they want to live in the greatest city in the world, there’s no point in trying to fight them off with a pitchfork.”
1. Three bedroom semi-detached house in New Malden for £475,000.
2. Five bedroom end of terrace house in Barking for £460,000.
3. Three bedroom terrace house in Harringay for £629,950.