Nearly 200,000 properties have been bought with Help to Buy

Michael Lloyd

February 26, 2019

Since the launch of the Help to Buy: Equity Loan scheme in 1 April 2013, 195,219 properties were bought using the scheme as of 30 September 2018.

The Ministry of Housing, Communities and Local Government has found the total value of these equity loans was £10.66bn, with the value of the properties sold under the scheme totalling £49.89bn.

Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA),  said:“These statistics show that Help to Buy has become a cornerstone of the UK property market. The government’s programme continues to stimulate the bottom of the housing ladder, providing essential support to the whole of the UK property sector.

“These figures show a continuing trend in what looks set to be the strongest year so far for Help to Buy sales, with total completions since the scheme began likely to have passed the 200,000 mark by the end of 2018, with around 1,000 sales a week completing with the support of Help to Buy in 2018.

“Our recent “New Normal” report predicts a stable but flat mortgage market through 2020, so we expect Help to Buy to remain invaluable in supporting home buyers into the next decade.

“The support will also help keep the property market on an even keel during a period of heightened uncertainty as a result of the UK’s expected departure from the EU this year.

“Although last year saw the highest number of first-time buyers since the financial crisis, millions of households are still waiting to get on the housing ladder, and Help to Buy will continue to play a crucial role in helping some of these households into home ownership over the next four years.

“Given the important role Help to Buy plays in lifting households into home ownership and the large number of people who have not been able to climb onto the first rung of the property ladder, long-term solutions are required to ensure the continuing prosperity of the housing market, post-2023.”

Most of the home purchases in the Help to Buy: Equity Loan scheme were made by first-time buyers, accounting for 158,013 (81%) of total purchases.

The mean purchase price of a property bought under the scheme was £255,542, with buyers using a mean equity loan of £54,630.

In London, the maximum equity loan was increased from 20% to 40% from February 2016, and since then to 30 September 2018 there were 10,829 completions in London, of which 9,091 were made with an equity loan higher than 20%.

Kevin Roberts, director, Legal & General Mortgage Club, added: “Not only has Help to Buy given builders the clarity they needed to deliver and plan more homes, but it is consistently supporting those borrowers who need it most.

“The extension of the scheme until 2023 will no doubt be music to first-time buyers’ ears, however, the industry needs to start planning for after this date to ensure there is an easy transition.  We’re already seeing increased innovation from lenders in this sector, who are offering higher LTVs and intergenerational mortgage products. It is this creative thinking that needs to be transferred to other areas to ensure a robust housing market for all.”

Mark Dyason, managing director of the specialist property broker Thistle Finance, added: “In an increasingly glacial market, Help to Buy has kept the new build sector afloat and enabled many first time buyers to get on the ladder.

“But when it finally comes to an end, the fallout for the biggest developers that have benefited from it the most could be devastating.

“The major property developers have done exceptionally well out of Help to Buy but at some point the supply of the drug will stop and they will have to go cold turkey.

“Help to Buy is in much the same vein as low rates since the Global Financial Crisis. They have kept the economy going but equally they have kicked the can down the road.

“The Help to Buy scheme is arguably a hollow victory with the potential to cause all manner of problems both for the buyers who have used it and the developers that have offered it.

“We live in an era of short-termism but the fall-out from artificial props like Help to Buy could be long-term.”

Simon Read, managing director of lending, Magellan Homeloans, said:  “These figures on the Help to Buy scheme, along with the latest from UK Finance, clearly demonstrate that it’s first-time buyers who are currently driving the housing market.

“When comparing the two it’s also clear that Help to Buy is driving all of the increases in first-time buyers mortgages.

“However, the issue of raising a deposit hasn’t gone away for first-time buyers – nearly two-thirds put down the minimum deposit of 5% which, based on the average Help to Buy purchase price for first-time buyers, is over £14,000 – a significant amount to find while still meeting day-to-day living costs.

“Given a median, gross national household income for first-time buyers of just over £45,000 and using basic ONS household expenditure costs, even the best case scenario of saving every spare penny means it would still take around two years to save a deposit that size.

“This bears out our experience, having recently joined the Help to Buy market, of the continuing importance of allowing family help for first-time buyers when it comes to raising the deposit.”

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