MHCLG: More borrowers utilising the HTB scheme

Michael Lloyd

November 28, 2019

More borrowers used the Help to Buy Equity Loan Scheme to buy a property in the year to 30 June than that of the previous year, the Ministry of Housing, Communities and Local Government has revealed.

For England, home purchases completed under scheme totalled 52,268 in the first six months of this year which is up 6% year-on-year.

First-time buyers bought 43,285 properties using the scheme in the year to 30 June, compared to the same period last year.

Andrew Southern, chairman of property developer Southern Grove, said: “Almost a quarter of a million homes have now been purchased since Help to Buy was launched six years ago.

“And the feeding frenzy at the Help to Buy table shows no signs of slowing down, with the value of properties bought using the scheme bounding over the £60bn milestone in the second quarter of 2019.

“However, looming large over the frenetic activity is the March 2021 cut-off, when the scheme is replaced with one which will only be available to first-time buyers and will set regional property price caps.

“This deadline is likely to inject even more urgency into the market.

“And first-time buyers, unperturbed by Brexit uncertainty, are already showing increased eagerness to make the most of these equity loans while they can, with the number of purchases using Help to Buy growing 8% year-on-year.”

In London 6,149 home purchases were completed under the scheme in the year to 30 June which represented a yearly rise of 26%.

First-time buyers bought 5,865 properties under the Help to Buy: Equity Loan scheme in the capital in first six months of the year, up by 27% year-on-year.

Southern added: “Demand has been particularly strong in London with properties bought by first-time buyers using the scheme increasing by more than a quarter compared to last year.

“It is notable, however, that 75% of purchases are made using the full 40% equity loan, emphasising the challenge of buying a property in the capital with its high prices.”

Since the launch of the scheme on 1 April 2013, 236,313 properties were bought with an equity loan.

The total value of these equity loans was £13.46bn, with the value of the properties sold under the scheme totalling £62.04bn.

Most of the home purchases in the Help to Buy scheme were made by first-time buyers, accounting for 192,212 (81%) of total purchases.

Mark Davies, managing director at Link Mortgage Services, said: “With the government set to wrap up special Help to Buy ISAs imminently, we continue to see rises in the number of property sales to first-time buyers.

“Since the launch of the Help to Buy scheme, the government has helped more than 192,000 consumers looking to get on the property ladder.

“Take-up in London has been relatively small, due to a lack of affordability in the capital and despite more generous equity share offered by the scheme.

“In general, Help to Buy completions which have a natural bias toward houses over flats have become geographically concentrated, with hot spots evident in the regions of Birmingham, Bristol and the North West.

“We will have to wait and see how the lower end of the housing market will be affected when this generation of first-time buyers moves on to buy their next home (which is more than likely, given the mix of properties bought through the scheme).

“If the scheme has introduced quirks in the market, despite the upward trend in national house prices values, locally these borrowers we may see their house values rise below expectations.

“This could create a ‘property trap’, with a knock-on impact in other segments of the market.”

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