Help to Buy helps over 160,000

Help to Buy has helped over 160,000 people to buy a home, according to new official figures. But is it enough?

During the three years of Help to Buy: Equity Loan scheme (to 31 March 2016), 81,014 properties were bought with an equity loan, new figures from the government reveal. Most of the home purchases in the Help to Buy: Equity Loan scheme were made by First Time Buyers, accounting for 65,474 (81 per cent) of total purchases.

For the Help to Buy: NewBuy scheme, 5,695 house purchases were made since the launch of the scheme in March 2012. There were no new transactions in Q1 2016 due to the scheme closing to new mortgage offers on 8 March 2015.

Since the launch of the Help to Buy: mortgage guarantee, 78,749 mortgages have been completed with the support of the scheme. Of these, 79 per cent were purchases by first time buyers.

Compared to total mortgage completions in each region, the scheme is supporting a higher proportion of mortgages in the North West and Scotland, and a lower proportion in London, an indication that the scheme is having the intended effect of enabling homeownership. Indeed, the mean value of a property purchased or remortgaged through the scheme was £156,301, compared to a national average house price of £292,000.

Patrick Bamford, Business Development Director for AmTrust International, Mortgage and Special Risks, expresses concerns about what will happen when the scheme ends this year, citing “very real concerns that this will cause a sharp decline in high LTV lending”.

“It is crucial the mortgage market establishes a long-term supply of high LTV loans to support the many first time buyers who are unable to save large deposit sums but want to buy their own home,” says Patrick. “Adopting private mortgage insurance would provide lenders with the protections they need while supporting home ownership through the provision of high LTV mortgages.”

Bonny Hedderly, Managing Director of Deposit Doctor, adds: “The impact of Brexit on the housing market is likely to result in a slowing of house price rises but even so, the crisis of supply means that for too many, home ownership can feel out of reach financially. Today’s Help to Buy figures show the scheme has begun to have impact, especially in helping first time buyers into the market, but more must be done to tackle the complexity of the process and costs associated that deter people from buying.”

Concern also remains from some in the industry that Help to Buy is not enough to tackle the housing crisis significantly.

Charles Holland, Head of Residential Investment at Marsh & Parsons, highlights London as an example: “Since the start of February, Help to Buy applicants within Greater London have been able to claim an equity loan of up to 40% of the purchase price of a property, but just 256 buyers made use of this by the end of the first quarter. This shows that while the scheme is helping some people take the first step on the property ladder, it is still a drop in the ocean of what is required to truly get young Londoners moving. Such initiatives are welcome, but until the fundamental issue of the housing supply shortage is fully addressed, nothing will truly change.”