88,000 buy a new home under Help to Buy

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Help to Buy, the government’s flagship housing scheme, says it has helped 88,420 people buy a new home since it was created.

The Help to Buy scheme was created in 2013 to support taxpayers who could pay a mortgage, but couldn’t afford the high deposits demanded by lenders in the wake of the financial crisis. It offers 95% mortgages for those buying new-build properties and benefits first-time buyers, with the vast majority of sales outside of London and at prices well below the national average.

According to the government since the launch of the Help to Buy equity loan and mortgage guarantee schemes that:

  •  80% of scheme completions have been made by first-time buyers
  • the average house price was £185,000, significantly below the national average
  • over 80,000 people have bought a home through the scheme
  • 94% of Help to Buy completions took place outside of London
  • over half of Help to Buy completions have been for new-build homes
  • all part of the government’s long term economic plan to help hardworking people get the keys to their own home.

The government claims that thanks to the scheme, 66,661 households have now bought their first home, demonstrating that the scheme is successfully targeting those who need help getting on the housing ladder, despite only accounting for a small proportion of the mortgage market (3% for both mortgage guarantee and equity loan)

With almost all completions outside London, the highest number of homes have been through the mortgage guarantee scheme in the North West region. The equity loan – a scheme for new build properties – is particularly high in the south-east region.

Figures for the mortgage guarantee scheme also show completions have been least concentrated in regions where house price growth is highest. In London the scheme makes up just 1.3 % of all mortgage lending compared to an average of 3% across the country.

The government believes that it has incentivised growth in the construction industry – which has now been growing for 21 consecutive months.

Home Builders Federation Executive Chairman, Stewart Baseley said:

“Help to Buy has helped tens of thousands of people onto the housing ladder who otherwise would have struggled to meet their ambition of home ownership. First time buyers in particular are taking advantage and the scheme is helping people in every part of the country. The resultant rise in demand is allowing builders to increase much needed house building levels. This is turn is creating tens of thousands of jobs and boosting local economies the length and breadth of the country.”

However, critics say that the government guarantee, that forms part of the second phase of the scheme, could create a housing bubble in the UK.

Not all mortgage seekers will be able to sign up, and those who do will still have to go through rigorous affordability checks by their lender.

Lenders are now warning that a failure to replace the help-to-buy mortgage guarantee scheme when it comes to an end next year will push the first-time buyer market back into decline.

The government has committed to continuing the help-to-buy loan scheme on new build properties until 2020.

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