Government to launch London Help to Buy scheme

George Osborne said:

"The government will help address the housing crisis in our capital city with a new scheme – London Help to Buy.

"Londoners with a 5% deposit will be able to get an interest-free loan worth up to 40% of the value of a newly-built home.

"My Honourable Friend for Richmond Park has been campaigning on affordable home ownership in London. Today we back him all the way."

Adrian Anderson, director of mortgage broker Anderson Harris, said:

"Help to Buy has been hugely successful across the country but hasn’t had such a big impact in the capital because property prices are that much higher. Offering a 40 per cent interest-free loan to London buyers will make a huge difference, enabling many to get on the housing ladder when they simply couldn’t before.

"Take the example of a one-bed flat in Camberwell on the market at £360,000. A 5 per cent deposit works out at £18,000 but if you don’t buy via Help to Buy, you then need to raise a mortgage for the remainder, which requires earnings of circa £85,000, pricing out many buyers. Under London Help to Buy, a 40 per cent interest-free loan would be available, leaving you with a mortgage of just £198,000 to raise. This could be done with an income of £50,000, which is much more achievable in the capital."

Founder and CEO of eMoov.co.uk, Russell Quirk, commented:

"The government announced today that they would continue flogging the dead horse of ‘Help 2 Buy’, promising £4bn to build 135,000 shared ownership homes for households under £80,000 (£90,000 in London).

"Again I would be pessimistic as to how much good this will do and in fact, how many of these transactions will actually materialise. So far the scheme has helped just 70,000 homeowners in the last two years, not even 4% of the 2.4 million property transactions by British home-buyers in the same time period.

"Mr Osborne has also announced a new ‘London Help 2 Buy’ scheme, offering help for those with a 5% mortgage deposit. Given that this translates to a deposit of £25,000 on the average London house price, I can’t imagine it will help too many who are struggling to get on the ladder in the first place."