Over 200,000 aspiring homeowners who currently privately rent property have been priced out of obtaining their own house due to the governmentís Help to Buy scheme, according to one of the countryís biggest campaign groups.
PricedOut, identified that whilst the government initiative has indeed contributed towards the acquisition of around 19,000 homes for prospective owners, that nevertheless it has warped the complexion of the property market so much that it has actually prevented a further 245,000 people from being able to afford a home.
Help to Buy was released in two phases last year, with the first stage, the Equity Loan scheme, unveiled in March 2013. Whilst the initial phase has been praised for encouraging people to build their own property, the second phase, the mortgage guarantee scheme, has garnered widespread criticism for lowering the deposit requirements for prospective homeowners to just 5%, and allowing people to acquire mortgages with loan to value as high as 95%.
This, it has been argued, has artificially pushed property prices out of reach of the average workers finances, as it has inflated demand at a rate that far exceeds the production of supply, with the most heavily hit areas cited as London and the South East, where the average home rose by over 10% in value last year.
PricedOutís remarks were based on the research they have undertaken recently that utilised the English Housing Surveyís data on the number of people currently renting property, and the Office for National Statistics most recent house price index, in order to ascertain the quantity of private renters who can actually afford a house.
And the study emphatically disclosed that almost 3.5 million private renters have been rendered incapable of purchasing property under current house prices, which comprised 66% of all people who rent at the moment.
PricedOut added that under the current trajectory of property price increases, even if the average salary rose by 2.5% this year, that another 150,000 people who currently privately rent would be unable to obtain a home by the end of 2014.
The campaign group released a number of proposals that they have urged the government to consider in order to bring balance back to the property market, including setting a target to bring price inflation down to an emphatic 0%, implementing a significantly larger capital gains tax on foreign investors, and enhancing the rights available to people who rent at present.
Last week, the EY item club and the think tank Civitias identified that property prices in London were soaring at a rate significantly higher than the rest of the UK as foreign investors were artificially enhancing demand by continually purchasing expensive property in the capital.
PricedOut spokesman Dan Wilson Craw said: “The Help to Buy scheme is an utter travesty. The government reckon they have a policy that will help me and other young adults, but it is managing to achieve the exact opposite, condemning thousands of us every month to a lifetime at the mercy of landlords.”
“Help to Buy is just part of a wider addiction to rising house prices where the wealthy see property as the fast track to greater riches. We need urgent action to end rising house prices and allow incomes to catch up.
“If the government can start by setting a target of 0% inflation they will send a signal to speculators that this country will start treating houses as homes and not financial playthings.”
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