The amount of people looking to buy in the property market generally decreases in November, as people turn their attention to planning for Christmas.
As a result, buy-to-let investors can often find good deals at this time, as sellers are desperate and there is little competition.
However, a second Help to Buy scheme may have the same impact as the first, on the property market. This could mean higher than ordinary demand in the coming months, and could make it difficult to close deals at a low price.
The second scheme will be different from the previous system, however. The first scheme related only to new build houses with purchase prices under £600,000.
For buyers, this would mean that, considering they have a 5% deposit, the Government would pay up to 20% of the property’s value to the developer, making a 75% loan-to-value mortgage a necessity.
This lower-level lending was made possible by Help to Buy, alongside cheap loan rates from the Funding for Lending Scheme.
The new scheme aims to help lenders offer 95% loan-to-value mortgages. This will aid the purchase of second-hand homes of under £600,000 value.
The lender will be required to pay the Government a fee as protection against the buyer not paying the mortgage. In this case, they will be able to claim back up to 15% of the loan from the Government.
Despite the scheme being well publicised, this second instalment may not be as effective as the first, unless lenders reduce their interest rates.
With current rates on 95% mortgages around 5.5%, those under the new scheme will be just 0.5% lower. This means that the buyers who already have a 5% deposit can afford the existing rates and will possibly already be on the property ladder.
From a buy-to-let viewpoint, the new scheme looks likely to have little impact on the market.
For well-off landlords, there are expected to still be many opportunities for new investments in the next few months.