Help to Buy in London: the key facts and the best-value areas to buy

Developers and lenders are getting behind the Help to Buy scheme - now extended to be available until 2021 - while London's cash-strapped first-timers are making the most of five per cent deposit requirements and 40 per cent Government-backed equity loans.

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David Spittles16 February 2016

The Help to Buy scheme covering homes valued up to £600,000 has been extended to be available until 2021 for cash-strapped Londoners who want to get on the property ladder in any borough.

Last November, the Government doubled the size of the equity loan it makes available, from 20 per cent to 40 per cent of the home’s value. At a stroke, this slashed the salary needed to afford the average-price two-bedroom London property (£465,000) from £56,000 to £36,000.

Unsurprisingly, this has fuelled demand for new homes across the capital and into the commuter belt. Housebuilders report that more than a third of sales are now backed by Help to Buy, and this proportion is expected to grow as the improved scheme beds in.

Previously, many buyers’ incomes were too low for a lender to approve a 75 per cent mortgage, leaving a shortfall that could only be bridged by the buyer putting down a bigger cash deposit, usually an impossible challenge.

From £385,000: Wembley Park Gate is a development of 211 new homes in a 14-storey tower close to Wembley Stadium and Tube station

Help to Buy mortgages

Without Help to Buy, a first-time buyer in London typically would need a deposit of about £90,000, whereas under the scheme, buyers need to have a deposit of five per cent of the purchase price. And, with a 40 per cent Government-backed equity loan, they only require a mortgage for 55 per cent.

Crucially, lenders are getting behind the scheme. This week, Nationwide launched a fresh range of Help to Buy mortgages, with rates as low as 1.59 per cent, and free legal and survey fees.

The Government has made available an extra £2.3 billion of funding — generous but not infinite — so it makes sense for buyers to act now, especially as house prices are expected to continue on an upward trend this year.

Help to Buy is not available with all new housing developments as homes at some London projects are too high-value and outside the scope of the scheme. But builders are rushing to register suitable developments, and many are already covered. The £600,000 price ceiling along with the 40 per cent interest-free loan has opened up the market in all travel Zones.

Since April 2013, when the original scheme was launched, 3,128 Help to Buy loans have been granted in London, though none in the most expensive boroughs — Westminster, Kensington & Chelsea, Camden and City of London. That may now change.

From £315,000: apartments at East City Point are modern, stylish and also environmentally friendly

Arthouse Ltd

Help to Buy hotspots: where to start your search

Start your search just beyond the congestion charge zone, where it is still possible to find good-value pockets of the inner city, some very much on the up. Areas falling into this catchment include Holloway, Finsbury Park, Whitechapel, Shadwell, Dalston, Deptford, Bethnal Green, Bow, Bermondsey, Rotherhithe and Walworth.

Traditionally, south-of-the-river homes have been less expensive, but a catching-up process has kicked in.

Check out the swathe of south-east London stretching from Woolwich via Dulwich and Herne Hill to Peckham, Camberwell and Lambeth that has been opened up by the East London line.

Beyond the snaking South Circular Road are some pleasant inner suburbs in places such as Streatham and Norwood, where homes are relatively low-priced.

Help to Buy homes: in up-and-coming areas

Barratt has unveiled a fresh crop of Help to Buy developments in up-and-coming areas. These include Catford Green (prices from £309,000); Greenland Place in Deptford (from £408,000); Wembley Park Gate (from £385,000); Enderby Wharf in Greenwich (from £526,000 for two-bedroom flats); Hendon Waterside (from £423,000) and Waterside Park, Docklands (from £505,000 for two-bedroom flats). Call 0844 811 4334.

From £449,950: So Stepney offers apartments in a Victorian school conversion. Call 0845 459 5021

Help to Buy homes: six east London spots to watch

East London is where most new homes are being built. Away from hotspot areas such as Canary Wharf and Victoria Park, many homes are within the budget of first-time buyers.

Stepney is equidistant between the City and Canary Wharf, close to two Tube stations and walkable from the nightlife and restaurants of Shoreditch and Spitalfields. The area is full of history and is sprinkled with conservation areas and pockets of green space. At So Stepney, a Victorian school conversion where apartments are filled with character, Help to Buy flats cost from £449,950. Call Bellway on 0845 459 5021.

St Paul’s Square, Bow, has flats priced from £390,000, while at East City Point, Poplar, prices start at £315,000. Call Countryside on 020 7473 1198.

Help to Buy is even available in trendy Hoxton. City Wharf overlooks Regent’s Canal and has 327 apartments priced from £595,000. Call Fabrica on 020 3642 8973.

Going north out of central London, prices start to drop once past fashionable Islington. Homes at The Pavilions, Tottenham Hale, in Zone 3, cost from £339,995. Call 0845 257 9246. The Mount, at Mill Hill, has flats starting at £350,000. Call 020 8371 9269.

From £434,950: apartments at 243 Ealing Road benefit from great views across the city. Call 020 8997 3373

Robert Greshoff

Help to Buy homes: five west London spots to watch

Outer west London, where Crossrail is causing property ripples, also offers plenty of choice below £600,000. At Alperton, on the Piccadilly line, developer Hill is selling two-bedroom canalside flats at 243 Ealing Road, priced from £434,950. This requires a deposit of £21,748 and a mortgage of £239,223. Call 020 8997 3373.

Two-bedroom homes at Drayton Garden Village, next to a new Crossrail station under construction, cost from £404,995. Call 0333 202 5146.

Brentford is enjoying a second wave of regeneration, with high-profile commercial buildings being converted into homes. The former Alfa Laval complex in Great West Road has suddenly become WestSide, with 137 apartments arranged around courtyard gardens. Prices from £334,995. Call 0333 202 5149.

Jigsaw, near West Ealing Crossrail station, has two-bedroom homes priced from £550,000. Designed by architect Conran and Partners, the name is inspired by the “puzzle pieces” that make up the site — a collection of individual buildings linked by open and landscaped spaces that also connect with local parks and transport. Call Fabrica on 020 8003 0701.

Acton Gardens, closer to the centre, is a new “quarter”, formerly a council estate, with one-bedroom flats priced from £420,000. Call 020 8993 6923.

HELP-TO-BUY: HOW IT WORKS

Help to Buy London applies to new-build homes worth up to £600,000 in any borough. You can be a first-time buyer or home mover, and there is no age limit.
The loan is not a permanent fixed sum, but an equity loan based on the value of the property. So it has to be paid back within 25 years or when the property is sold.
If the property has increased in value, the amount to be paid back will be proportionately higher, so the Government shares any profit.
If house prices fall, buyers may be in negative equity, with borrowings of at least 100 per cent of the property value and a squeezed budget as interest clocks up on the equity loan.
No interest is charged on the equity loan for the first five years. From year six, a fee of 1.75 per cent is payable, rising by Retail Prices Index plus one per cent.
You cannot own any other property when using the Help to Buy scheme and you cannot sublet the property once you have bought it.
If you save for a deposit through a Help to Buy ISA, you can get a 25 per cent bonus of up to £3,000 to supplement £12,000 of savings.

Help to Buy: Earlsfield

Achintya Varma, 36, and Narain Divya, 31, had been renting in Westminster for most of the past decade.

Achintya Varma and Narain Divya bought a two-bedroom flat at Westfield Waterside

The couple work in the finance sector, but had given up hope of buying in central London and considered a move to St Albans — before discovering a Help to Buy development in Earlsfield.

Putting down a five per cent deposit, they paid £591,950 for a two-bedroom flat at Westfield Waterside on the banks of the River Wandle. Their monthly mortgage is £1,900.

“We sealed the deal in two weeks,” says Achintya. “It’s such a nice feeling getting on the property ladder after 10 years of renting. We absolutely love it.

“The area is surrounded by parks and commons, yet it is really well- connected, and our research tells us that this part of London is one of the best for appreciating value.”

Help to Buy: a one-bedroom Croydon flat for £229,000

Croydon has excellent train links to central London, plus a lot of new-build homes in the pipeline.

IT consultant George Hafiz, 23, took advantage of Help to Buy

George Hafiz secured a one-bedroom flat for £229,000 at New South Quarter. “I’ve had a job since I was 16 and had managed to save £40,000. But it wouldn’t have been possible without Help to Buy,” he says.

“Previously, I lived in a shared house in Guildford. Having my own place has really improved my quality of life.”

Help to Buy: a Chelmsford home from £400,000

Developers are rolling out Help to Buy in the suburbs and commuter towns, where houses are affordable for young families.

Beaulieu Heath, a 3,600-home settlement in Chelmsford, where houses start at £399,995

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Matthew and Sarah Stringer bought a four-bedroom townhouse at Beaulieu Heath. The couple have two young children. “We were able to buy a bigger home than we could otherwise afford, yet still only had to put down a five per cent deposit,” says Matthew, who commutes to his banking job in the City. One huge plus is that the development has provision for a new railway station on the East Anglia Main Line into Liverpool Street.

Sarah works from home and makes use of the development’s high-speed, fibre-optic cabling.

Dee Park, Reading: £320,000 for a three-bedroom house

Melanie and Stuart Wynne, both 30, have used Help to Buy twice, the second time to trade up to a £320,000 three-bedroom house at Dee Park, Reading, Berkshire. “We made a profit of £57,000 on our first home, so Help to Buy certainly worked for us,” says Stuart, an electrical safety officer. A new phase of houses at Dee Park has been released. Prices from £345,000. Call 0188 942 0292.