If you believe critics, the Help to Buy Scheme – the mortgage guarantee element – has the potential to set us all up for a house price bubble followed by a correction when State support is withdrawn at the end of its three-year term.
To say that Help to Buy 2 – as it has been dubbed – has divided the housing industry and its stakeholders would be something of an understatement.
However, this certainly is the start of a trip into the unknown.
The fact that there are still so many uncertainties about how the scheme will operate in practice is underlined by the hesitation on the part of some lenders in terms of whether they will participate or not.
Clearly, the State-backed lenders – RBS, NatWest and Halifax – had little choice in the matter and were quick out of the blocks in launching products. Others have simply announced they will be ready to launch come the January 1 deadline, while some of the biggest lenders in the country – Nationwide, for example – are currently keeping their powder dry.
So, what does this mean for agents? Clearly, in many areas of the UK enquiries are already increasing.
While there have been 95% LTV mortgages available, there has been limited competition and choice, and lenders have been able to cherry pick the most credit-worthy borrowers who present the lowest risk possible.
To a great extent, nothing will really change in this regard.
Lenders, even with the fall-back of the State guarantee, are still only going to accept those borrowers who tick all the affordability and suitability boxes. The regulatory rules demand this. However, there will certainly be more choice at the higher LTV level and therefore the market will open up in that space.
The major opportunity for agents in this new environment is to help clients understand what is available to them but also to manage expectations, given that no money will actually be lent until January.
The overwhelming obstacle for agents will be maintaining levels of supply. And it is here where critics of Help to Buy who suggest it may force prices up, have a valid point.
We are certainly not building enough property in this country. Supply in a large number of areas is simply not going to be sufficient.
All in all, the jury remains out simply because there is much more to come from the lenders in terms of their involvement and none of us can be truly sure how the market will really react.
I suspect we will see a growing number of lenders announcing their intention to be involved in 2014 but few willing to hit the product trail this side of Christmas. This does mean that next year could see the shackles well and truly off the UK housing market but there are many bridges to be crossed.
* Rob Clifford is chief executive of Century 21 UK and group commercial director of Shepherd Direct Group
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