The government’s help to buy equity loan scheme has seen almost 7,000 reservations in its first three months of operation, with more than 1,000 sales already completed.
Housing minister Mark Prisk said: ‘It’s crystal clear that the help to buy equity loan has captured the public’s imagination and is getting Britain building again, which will help achieve a long-term, stable housing market.’
Mr Prisk added that the scheme’s success was delivering a surge of business to house builders and showed the huge pent up demand for homeownership among the public.
The initial stage of help to buy started in April and allows people to purchase a new build home worth up to £600,000 with only a 5 per cent deposit. The government offers an equity loan worth 20 per cent, interest free for five years.
A previous scheme, firstbuy, operated in a similar way, but was restricted to first-time buyers, had a £60,000 income threshold, and a lower limit on the value of properties.
The Communities and Local Government department said on Friday that extending support to existing homeowners meant the scheme is helping remove a bottleneck in the market, where homeowners want to move but struggle to raise a large enough deposit to purchase their next property.
However, there have been warnings that the help to buy scheme isn’t stimulating housing supply and instead is resulting in increased house price inflation.
In a second strand of help to buy, the government intends to make available £12 billion of guarantees to lenders, sufficient to support £130 billion of high loan-to-value mortgages from January 2014. The scheme is available for both new build and existing properties.