5th June 2015
The government’s Help to Buy scheme for new build properties has seen completions decline over five consecutive months.
The Help to Buy scheme was introduced in two parts; the first part (known as HTB 1) saw the government provide an equity loan of 20% of a property’s value up to £600,000. This loan was offered to those buying new build properties only.
The second part, HTB 2, was launched three months later and saw the government underwrite loans of up to 15% of a property’s value up to £600,000. Under the guarantee scheme new and existing properties could be purchased.
Analysis by Mortgage Advice Bureau show that HTB 1 has seen five consecutive months of completions declining year-on-year.
There were 4,628 HTB1 house completions in Q1 2015, which was the slowest quarter for completions since Q3 2013, the first full quarter for completions under the scheme.
Compared to the same quarter in 2014, HTB 1 completions declined by 17% from 5,581 in Q1 2014 to 4,628 in Q1 2015. Mortgage Advice Bureau said a 43% drop from 8,166 completions in Q4 2014 to the Q1 2015 figure was an even bigger concern.
Andy Frankish, new homes director at Mortgage Advice Bureau, said: ‘The drop in completions over the last few months at a time when total house building is on the up suggests lenders are putting their weight behind new builds without needing the government incentive.
‘It is certainly positive for the economy that house builders no longer look so dependent on HTB to grow the housing stock. All the same, it begs the question: would house building rise faster if more can be done through HTB?
‘If the scheme was being used to its full capacity with better promotion of the schemes on a national level, it would not only help those still struggling to access the housing market but provide a much needed push for house building which is still a great concern and a long way off target.’