The new "Help to Buy London" scheme is launched this month which helps buyers to acquire new-build homes with a deposit of 5 per cent, but buyers would need to earn £73,000 a year in order to buy an "average" home.
Their deposit tops with an interest-free loan of up to 40 per cent of the price of a property. This scheme is available for properties that cost up to £600,000 but then, the cost of an average home is almost £40,000 more than this.
"Help to Buy London" is a deposit assistance that doubles the support from the original "Help to Buy" by providing 20 per cent interest-free loan for new-build properties. It also offers a bigger loan because of the higher price of property in London.
But according to experts, the scheme will not be able to help buyers because of the very expensive property prices in the area, thus, setting the earnings bar higher.
In order to purchase a £600,000 home, one needs a substantial salary of £73,000 which is double the average salary of £35,000 in London, according to Zoopla.
The buyer's 5 per cent deposit of £30,000 will be topped up with a Government interest-free loan with the price of £240,000 which is 40 per cent of the amount. This means, that the buyers would still need to mortgage £330,000.
"The Government's extension of the Help to Buy scheme in London is certainly a positive step, and may just give 'Generation Rent' a better chance at getting a foot onto the property ladder," Lawrence Hall of Zoopla said, according to Mail Online.
"With the average property value in London currently standing £637,298 and the scheme only applying to new build properties with a value of up to £600,000, buyers will have to look hard for an affordable London home. Those signing up to the scheme will also need to consider the mortgage costs that come with it. While mortgage lenders are softening the blow by offering competitive rates, at the very top end of the scheme buyers would need to find a £30,000 deposit," he added.
