9th December 2015
More than 130,000 properties have been purchased with the aid of the Help to Buy scheme since it launched in April 2013, new figures reveal.
The scheme includes an equity loan option, a mortgage guarantee and, as of this month an ISA account, all of which are aimed at helping buyers with small deposits to get onto the housing ladder without needing to rely on the Bank of Mum and Dad. From early 2016 a London-specific initiative will launch offering an equity loan of 40% instead of the usual 20% provided under the scheme.
The figures show that first-time buyers represented 81% of total equity loan sales – or 50,969 purchases.
The average purchase price was £217,999 under the scheme, and the typical equity loan element was £43,370.
The regions with the highest levels of completions using the scheme, were Wiltshire (1084), Leeds (999), Central Bedfordshire (979), Peterborough (819), County Durham (803) and Bedford (772).
Andrew Bridges, managing director of Stirling Ackroyd, says: “Help to Buy is a radical scheme for drastic times – but it will never be enough to shift the dial fundamentally. Because it is not Help to Build.
“First time buyers are facing a sheer cliff of house prices. Particularly in our capital city. Just a one bedroom flat already costs more than the £450,000 upper limit for the Help to Buy ISA in two thirds of London postcodes – and will in time push past the £600,000 limit for the Help to Buy scheme itself.
“So special schemes like this are a leg-up onto the housing ladder – for today’s potential buyers, not necessarily tomorrow’s. Helping current buyers speed up their ambitions is honourable – but is likely to only boost prices further. We’re seeing prices accelerate in the capital again now, even into the winter months. In light of this, there is a creeping danger that the government focuses only on shorter-term solutions, and not the long-term challenges too.
“In the long run, there’s only one thing London’s first-time buyers need from the government – more homes to live in, whether as owner or tenant. Planning officials need steadily increasing targets for new homes, not a vaguer preference for rejections.”
Andy Frankish, new homes director at Mortgage Advice Bureau (MAB), says: “The Help to Buy equity loan scheme helped more than 6,000 people onto the property ladder in Q3 2015: an annual increase of 4%. The vast majority of those benefitting from the scheme are first-time buyers who understandably are purchasing properties in the lower price brackets. The scheme continues to reach its target audience of buyers joining the property market for the first time as homeowners.
“Compared to other regions, uptake of the scheme in London has been relatively low, with 85% of London boroughs having less than 200 Help to Buy equity loan completions. House prices in the capital are so high, a 20% equity loan is still not enough for many to be able to afford a property. The introduction next year of a dedicated Help to Buy scheme for London, with an increased 40% equity loan, will therefore be welcome news for first-time buyers struggling to afford to buy in the capital. The scheme will require a maximum 55% mortgage, rather than one at 75% loan to value.
“While the equity loan scheme is well ingrained in the sales of new homes, and continues to evolve in response to buyer’s needs, more creative solutions that address underlying problems to housing affordability must be developed in addition to targeted schemes. The greater focus being placed on shared ownership will help, as will the creation of Starter Homes, but these will need the full support of lenders to have the desired effect. Increased housebuilding will eventually deliver more homeownership opportunities.”