Like a lot of schemes which make things more affordable for those without the upfront money, there is a sting in the tail and ultimately it costs more.
There have been loads of threads about these properties. Where they have value and merit, is in scenarios where someone will never be able to buy on the open market….and that means never, even if they saved really hard for multiple years. For people who can’t access any family help at all or won’t be able to save the necessary deposit or get a mortgage for the multiples needed, it can be a leg onto the property ladder.
However, loads of people go the Help to Buy route, who could have avoided it and all the pitfalls mentioned here. People get lured in by the shiny new build, the chance to buy perhaps a couple of years earlier, and the idea of lower repayments to start with. People often get lured in who haven’t even been saving for a deposit for long…they didn’t expect to buy for a couple more years, but then these scheme tell you, you can have it right now and right now it won’t be expensive. It’s just too tempting. People who go for it, to be honest aren’t the most money savvy.
What would be better for lots of people who have a reasonably paid job or 2 incomes, would be to look harder into properties they could afford without help to buy, even if it means saving hard for another year or 2. Going instead for oerhaos an ex-council house, or something a bit shabby which needs some work makes more financial sense. These don’t have the new build premium, which results usually in no gain in equity for a couple of years at least and often a loss, and crucially don’t bring the downsides of stair casing costs with some scheme where you buy a bigger share, or remortgaging into standard mortgages from help to buy. At the 5 year point, those who’ve bought something a bit shabby or ex local authority or less good area, might find they have added value, gained equity, have a pay rise etc and are ready to sell up and move on. It’s easier than in a shared ownership or help to buy place. Or they might be staying and remortgaging without all the hidden costs and aggro.
Obviously doesn’t help those who are just realising the downsides. But for anyone on this thread considering it….just look a bit more at the local market first. Shiny new builds look lovely but aren’t necessary. Some of those flats are tiny tiny and for less money on the open market, you’d get bigger, with less chance to lose value due to new build premium. Expect to be saving for a deposit for several years. If property is something you’d an get after 6 mo this saving, because your share will be very low and so the deposit is tiny, you really haven’t saved enough. Expect to save ha4 a bit longer….becaue it’s worth it in the long term.
Only those for whom there isn’t and will never be an alternative should use these schemes. For everyone else, the big winners are the house builders who find a ready supply of people who pay a premium for nee builds, thinking they’ve got a bargain because if the government money…but realise a bit later the true costs if the scheme.