Bottom Of Property Market Increasingly Dependent On Help To Buy

The bottom end of the English property market’s dependence on Help to Buy has become clear in recent days as the use of Help to Buy hit record levels in 2018 and is only continuing to soar.

In the year to 31 December 2018, 52,057 buyers used Help to Buy; Equity Loan Scheme to purchase their home. This figure represented a 12% increase compared with the 46,298 housing transactions completed using the Help to Buy: Equity Loan Scheme in 2017.

Similarly, first-time buyers continued to embrace the scheme’s use with fervour as the 42,748 properties purchased in 2018 represented a 14% increase on 2017’s figures.

Since the scheme was launched in 2013, the popularity and uptake has improved by around 85%. Overall, 210,964 properties have been purchased using Help to Buy in the past five years at a combined total of £54.48 billion. Of that number, 81% were purchased by first-time buyers (FTBs)

However, 22% of this total was made in 2018 alone as £11.71 billion was spent on property using the Help to Buy: Equity Loan Scheme last year.

From next year, the Help to Buy scheme will become exclusive to FTBs. When £10.38 billion worth of property has been purchased by second-steppers or other members of the property market since 2013, what will happen to the market once this option is removed?

Similarly, the scheme, which has been extended for FTBs for an additional two years will come to an end in 2023. The government will now need to ensure that there is an alternative in the pipe line to ensure that the construction and sale of new build property continues to increase in line with the government’s ambitious target of 300,000 new properties per year.

Craig Hall, head of broker relationships and propositions at the Legal and General Mortgage Club, commented:

“The scheme has not only enabled housebuilders to deliver more homes, but it is consistently supporting the buyers who need it most with first time buyers accounting for 81% of total purchase.

“Looking beyond the scheme’s end it’s vital that Government and industry works together to ensure these buyers remain supported. It’s likely that we may see private schemes coming to market to help fill the void, however during the previous Legal and General New Build Forum, the Ministry of Housing, Communities and Local Government hinted they are considering alternative schemes to Help to Buy.

“We’re already seeing a wave of innovation from lenders to help first time buyers, with a return to higher loan to value lending and the introduction of family assist mortgages. Any would-be borrowers looking to buy their first home and considering using Help to Buy should speak with a mortgage adviser. These professionals have an in-depth knowledge of the schemes and products available on the market, ensuring borrowers find the right solution for their unique circumstances.”

Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA), said:

“With as many as one in every seven first time buyers using Help to Buy in England in 2018, it is likely that the programme will remain invaluable in supporting home buyers over the remaining years of scheme, and will play a crucial role in helping to keep the housing market on an even keel during a period of heightened uncertainty as a result of Brexit.”

What will happen to the market once this option is withdrawn? Have you found that more first-time buyers are purchasing new property using Help to Buy?

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