A thousand homes sales a week involved Help to Buy scheme last year

A thousand homes sales a week, or 143 per day, were completed in 2018 with the Government’s flagship Help to Buy scheme, the latest official figures show.

Overall since the launch of the Help to Buy Equity Loan scheme in April 2013 up to the end of 2018 some 210,964 properties were bought with an equity loan, the data from the Ministry of Housing, Communities and Local Government (MHCLG) shows.

The total value of these equity loans was £11.71 billion, with the value of the properties sold under the scheme totalling £54.48 billion and most, some 81%, were to first time buyers.

The mean purchase price of a property bought under the scheme was £258,223, with buyers using a mean equity loan of £55,498. In London, the maximum equity loan was increased from 20% to 40% from February 2016, and since then to the end of 2018, there were 12,511 completions in London, of which 10,635 were made with an equity loan higher than 20%.

Kate Davies, executive director of Intermediary Mortgage Lenders Association (IMLA), pointed out that the scheme was highly successful in 2018 and has continued to stimulate the bottom of the housing ladder and indirectly support the whole of the UK property sector throughout the year.

Davies 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.’

She explained that strong HMRC transaction statistics for the first three months of 2019 possibly indicate that Help to Buy fuelled sales are still running at a healthy pace, continuing the trend that has been there for more than a year.

But she also pointed out that the MHCLG has made it clear that Help to Buy will come to an end in 2023 and that it is looking to lenders and developers to come up with alternative products for first-time buyers and second movers. ‘The challenge to the industry is clear and IMLA will assist wherever possible in facilitating discussions and proposals,’ she added.

Craig Hall, head of broker relationships and propositions at the Legal and General Mortgage Club, explained that the figures confirm the vital role of Help to Buy.

Hall said:

‘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,’ he said.

‘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.’


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