The £600,000 upper threshold of the Help to Buy scheme in London is distorting the capital’s property market, an independent estate agent suggests.
James Pendleton estate agents studied seven development hotspots in London over the last 12 months, and found that more than four times as many new-build homes were sold slightly below £600,000 than were sold slightly over the threshold.
Out of new-builds available on the market between £575,000 and £625,000, 83 per cent were sold for less than £600,000. 184 new-builds were sold under the threshold, while 38 new-builds were sold between £600,000 and £625,000.
According to April’s Land Registry, the average London house price is £482,779, but many properties can be much higher than this.
Because the Help to Buy scheme can only be used by first-time buyers looking to buy properties worth up to £600,000 in London, experts from James Pendleton warned it is resulting in the capital’s housing market being squeezed, and creating a vacuum in houses being sold between £600,000 and £625,000.
As such, the estate agent believes the scheme could end up harming first-time buyers in the future, despite the scheme’s purpose being to help first-time buyers get onto the property ladder.
“Artificially high demand in this price zone just beneath £600,000 will be forcing many to pay over the odds,” said Lucy Pendleton, co-founder and director of James Pendleton estate agents.
“By introducing a Help to Buy threshold and axing stamp duty slab tax, the government has simply replaced one disruptive line in the sand with another.
“These hurdles placed at arbitrary price levels have always had a distorting effect on the market, and that’s what we are seeing now, smack bang in the middle of the cost of many one- and two-bed flats for young professionals, which is a crucial price point for first-time buyers in these areas.”