First-time buyers seeking to use Government’s Help to Buy scheme in London are being failed by short-term mortgage offers, Mayor Sadiq Khan said today, as he called for more powers to ease the housing crisis in the capital.
The Help to Buy scheme provides first-time buyers in London with a Government loan of up to 40 per cent of the price of new-build homes under £600,000.
However, because these homes are bought one to two years before they are built, many buyers cannot access mortgages, which are usually valid only for six months.
This leads new-build homes to be snapped up by cash buyers and overseas investors, as Londoners cannot get mortgages far enough in advance.
In a letter to Chancellor Philip Hammond, the Mayor called on the Government to guarantee mortgage offers to 24 months for people using Help to Buy in the capital.
“Londoners are very concerned by reports of homes being bought as investments and left empty, as well as new homes being sold off-plan before people in the capital get a chance to buy them,” the Mayor wrote in the letter.
Offering a Government guarantee of mortgage offers for up to two years would “put London’s first-time buyers on a more level-playing field with cash buyers and investors,” he wrote.
The Mayor also wants Stamp Duty tax to be devolved to the London government, with extra powers to introduce a supplement for overseas buyers. The proceeds from this tax would go towards the building of affordable homes.
Home ownership in the capital has fallen starkly in recent years to fewer than half of London households.