Help to Buy still appealing to many first-time buyers

Almost nine out of 10 completions using Help to Buy are from first-time buyers, according to new figures just released.

The Ministry of Housing, Communities and Local Government (MHCLG) has revealed that out of 458,000 completions using one or more of the Help to Buy schemes, 402,000 – just under 88% – were by people on the first rung of the property ladder.

The government launched Help to Buy in April 2013 to try to provide some much-needed impetus into the housing market, especially in the spectrum of those trying to get involved for the first time.

Over four more years of Help to Buy

It offers a government-backed loan of 20% in addition to the 5% buyer’s deposit when buying a new-build home, and it was recently hailed as an “unmitigated success” since its launch in 2013 by the Home Builders Federation. It has now been extended by a further two years to 2023 in a measure announced in the 2018 Budget.

The MHLCG also reveal that 1.2m first-time buyers have opened Help to Buy ISAs, which offer bonuses of up to £3,000 on top of savings. The number of completions using equity loans, for both first-time and other buyers, were at their highest level in a quarter since the scheme started at 14,867 and 12,229 respectively.

“This uptick in activity may reflect the rise in new homes completions in the second quarter of the year, as well as discussions through this period around the future of Help to Buy,” says Grainne Gilmore, head of UK residential research at Knight Frank.

“The Government has now confirmed that the scheme will be changed in 2021, and from then will only be available to first time buyers for a further two years, with regional caps on sale prices.”

Help to Buy is slightly different for London-based buyers in a reflection of the market in the capital. Loans are up to 40%, with a 5% deposit, and 13,697 buyers have used the London Help to Buy scheme from February 2016 to June 2018.

But, soberingly, it can take London buyers a long time to save for that all-important deposit. Recent data from Compare My Move showed that it takes, on average, three years and seven months to get the 5% together. Huge regional variations apply – it takes only seven months to save for a 5% deposit in Burnley.

Appealing to higher income households

Interestingly, the total household income 25% of those buying for the first time under Help to Buy is at least £60,000 per annum, indicating the scheme’s appeal outside of the lower income brackets it was geared towards.

Reflecting on the MHCLG stats, Kate Davies from the Intermediary Mortgage Lenders Association added, “This further highlights that Help to Buy will remain invaluable in supporting home buyers into the next decade and will play a crucial role in helping to keep the housing market on an even keel during a period of heightened uncertainty as a result of Brexit.”




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