Help To Buy Premium Decreases In The Year To September

The alleged Help to Buy premium on housing has been questioned following recent statistics claiming first-time buyer prices have increased in line with the home-buying average since the scheme’s launch in 2013. 

UK wide house prices for first-time buyers increased by 32.8% since Help to Buy was launched in 2013 which is consistent with the national average according to data compiled by Springbok Properties. 

Furthermore, research compiled by Reallymoving, which looked at the sale of 41,500 new homes in the year to September 2019, found that Help to Buy homes were accruing an average premium of 10.3% in the UK. 

However, this figure has reduced from the prices paid at the start of 2019 when property premiums on Help to Buy were exceeding 12%.  

Considering new build property usually costs around 10% more than secondhand homes, the average premium paid for a Help to Buy property has fallen to a negligible 0.3% in the year to September. 

Whilst this could indicate the fair and positive impact Help to Buy has had on the property market, some buyers, on a regional basis, are being forced to pay noticeable premiums for their homes as increased buyer demand for new homes drives up competition and prices. 

The research indicates that areas like the West Midlands and North West England are paying 20% over the regional average for their homes.   

Shepherd Ncube, Chief Executive Officer of Springbok Properties, said 

“It seems that whilst around 200,000 buyers have indeed been supported, the unintended consequence in most areas has seen an above average hike in prices driven by the demand that Help to Buy has created. 

First rung homes are supposed to be more affordable, but we’ve seen the average price paid by a firsttime buyer accelerate to similar levels as the wider market. Not only has this made it more difficult for today’s aspirational homeowner, but perhaps some taxpayers might question the wisdom of using their money to fuel house prices even further.” 

Rob Houghton, Chief Executive of ReallyMoving – who conducted the research, said 

“Help to Buy might be better named Help to Sell, since our research shows that despite the scheme’s popularity with buyers, housebuilders are the ones reaping the benefits. 

“Most first-time buyers find it difficult to raise a deposit and as a consequence they are being cornered into the new build sector, where homes already command higher prices, before paying an additional premium on top if they need to use a Help to Buy Equity Loan. 

“In many cases they simply don’t have the deposit required to explore other options such as buying a second-hand home, which may offer considerably better value.” 

Is Help to Buy helping more first-time buyers gain a foothold on the property ladder? Or, lured in with the option for a smaller deposit, is Help to Buy exploiting those unable to afford greater deposits?  

Today's Conveyancer