Help to Buy is the government’s landmark scheme to help more Brits onto the housing ladder.

It started in April 2013, when the government began offering 20 per cent equity loans on new-build homes worth up to £600,000. The loans are interest-free for five years and allow buyers to secure a mortgage with a five per cent deposit.

In the second stage of Help to Buy, which kicks off this January, the government will offer mortgage guarantees of up to 20 per cent on all homes worth £600,000 or less. It is hoped this will encourage lenders to offer mortgages to more British residents, even if they can only scrape together a small deposit.

Fears

The government has alleviated fears of taxpayers being left to front the cost of Help to Buy customers defaulting on the mortgage by promising that only those with good credit ratings will be eligible to take part in the scheme. It will also be unavailable to anyone who owns a second home.

However, the main fear surrounding the scheme regards the effect it will have on house prices. A number of think-tanks have suggested that the scheme will boost demand for homes with adequately raising the supply, thus raising house prices to the point of housing bubble.

It has been suggested that these price hikes will actually make it harder for British residents to get on the housing ladder, rather than easier.

Housebuilding

However, recent statistics suggest that confidence amongst housebuilders has grown ever since the announcement of Help To Buy.

Activity in the construction sector has been improving for the last four months in a row. It spiked at its fastest pace for six years in August. What’s more, Britain’s three major housebuilders are all upping spend on landbanking.

This will give estate agency personnel more homes to sell and should, in theory, help prevent house prices from skyrocketing to unattainable levels.

The future

Although house prices have been rising steadily throughout the year, the number of mortgages being awarded to first-time buyers is on the up as well.

That is the main aim of Help to Buy and Chancellor George Osborne remains confident that the second phase of the scheme will get even more British residents on the property ladder.

“There are thousands of families who can’t afford the mortgage deposits required to buy a home. I want to help them,” he said in a recent interview.

Here’s hoping that he is able to continue doing just that.