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Number of properties bought using HTB equity loan up 40%

A total of 21,026 properties were bought using a Help to Buy equity loan in Q4 2020, up 40% on the same period in 2019, according to the latest Help to Buy statistics.

From 1 April 2013 to 31 December 2020, 313,043 properties were bought with an equity loan.

Looking to the data complied by Ministry of Housing, Communities & Local Government, the total value of these equity loans so far is £18.9bn.

The value of the properties sold under the scheme totals £86bn.

Additionally, 82% of all completions were by first-time buyers.

Craig Hall said: “Today’s Help to Buy statistics show that the government scheme continued to provide a useful route into homeownership for many in the final months of 2020.

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“Since its launch, the initiative has helped thousands to achieve homeownership, but government has been clear that it cannot last forever, and it will eventually stop in 2023.

“The housebuilders and financial services industry are currently working on private alternative schemes in the wake of Help to Buy, we are currently awaiting full details on how these will work.

“Fortunately, there are several other options for those wanting to step onto the ladder, including Shared Ownership, which enables buyers to step onto the ladder more easily by first buying a portion of the value of a property, before purchasing it outright.

“The government’s First Home scheme is also expected to launch later this year and will support those buying in their local area by providing a 30% discount on the value of certain new-build homes.

“Of course, while initiatives like Help to Buy and Shared Ownership have helped many people to buy, they do not tackle the issue of housing undersupply in the UK.

“Record levels of demand for homes have driven house prices up steadily and government will need a plan to control further increases.

“This will be vital to ensure that homeownership remains an affordable reality for future generations.

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“Just this week, government announced its intention for a new planning bill aimed at boosting housing supply, but more may be needed to ensure the UK hits its target to build 300,000 new homes each year.”

Lisa Martin added: “The Help to Buy scheme continues to be a vital resource for aspiring homebuyers in need of extra financial support.

“For first-time buyers in particular, a cohort that has been disproportionately impacted by the COVID-19 pandemic, Help to Buy has been a lifeline, and the demand we are seeing from this community is likely to continue ahead of the scheme’s closure in 2023.

“Promisingly, support for could-be homeowners remains a priority for the government. In addition to Help to Buy, the 95% mortgage guarantee scheme should also go some way towards supporting homebuyers with their property purchases.

“Moreover, this week’s Queen’s Speech further reaffirmed the government’s focus on tackling some of the issues felt by aspiring homeowners.

“In particular, the plans to modernise the current planning system to enable more homes to be built was an encouraging step.

“However, as part of this, I hope to see a strong focus placed on building properties suitable for first-time buyers, to ensure that there’s an adequate supply of homes available to this demographic.

“In the meantime, advisers with clients who stand to benefit from either Help to Buy or the newly launched guarantee scheme will be paramount in highlighting the options available to these borrowers.

“Guiding clients to a solution that suits their specific needs over the long-term should drive advisers’ thinking over the coming months – whether this be in the form of government support or something else.”

By Jake Carter

Source: Mortgage Introducer

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Help to Buy house purchases number 250,000

The Help to Buy equity loan scheme has facilitated 248,075 property purchases between its launch in 2013 until 30 September 2019.

The average purchase price of a property bought under the scheme was £264,785, with buyers using a mean equity loan of £57,694.

Some 81% of purchases using Help to Buy were for first-time buyers.

Joseph Daniels, founder of offsite eco developer Project Etopia, said: “Help to Buy continues to be a bait ball for buyers as they increasingly snap at this generous incentive while it lasts.

“The adjustment of the scheme in 2021 is now right around the corner. It will still be available to first-time buyers but regional price caps will begin to limit the size of the properties these purchasers can buy through the scheme.

“They know they may never have a better chance to get the home they want, as witnessed by the ever increasing usage figures for the scheme. Buyers are clearly taking advantage while they still can.

“The only thing these buyers need to watch out for is the way current and future price caps will squeeze properties into a narrow band of price. This can push up the prices of properties, as well as drag them down.

“This happens because demand is driven up for a relatively small segment of the market, and buyers should be careful not to over pay as it may offset the benefits of the scheme in the long term, when they come to sell.”

Craig Hall, head of broker relationships and propositions, Legal & General Mortgage Club, said: “Help to Buy was never meant to be a permanent fix, and it is great to see that both providers and lenders are already innovating to fill the gap, launching more higher-LTV mortgages that reduce the deposits first-time buyers need.

“Shared Ownership and mooted schemes such as the First Homes initiative could also play a role in the post-Help to Buy mix.

“For those already using the scheme, the journey isn’t over. Ensuring a smooth transition for these borrowers with clear Help to Buy remortgage options will be vital to helping them with their housing plans in the future.

“It’s crucial mortgage advisers are on hand to explore the best and most affordable options to suit the individual customer needs.”


Source: Property Wire

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Many people using Help To Buy scheme ‘could have bought a property anyway’

Significant numbers of people using the Government’s Help to Buy equity loan scheme in England would have been able to purchase a home anyway, according to a spending watchdog.

Around one in 25 home buyers using the scheme had household incomes of over £100,000, the National Audit Office (NAO) said.

The scheme had also helped to support large developers’ annual profits, according to the NAO, which said it was too early to tell whether the initiative had provided value for money.

Five firms combined – Redrow, Bellway, Taylor Wimpey, Barratt and Persimmon – accounted for just over half of sales made across England with the support of the scheme between 2013 and 2018.

It’s now beyond clear that rather than helping those who can’t afford to buy a home, Help to Buy has mainly been a subsidy for a housing bubble

Fran Boait, Positive Money

Redrow made up 3.7% of sales, Bellway accounted for 6.7%, Taylor Wimpey made up 11.9%, Barratt made up 13.3% and Persimmon accounted for 14.8%, according to the NAO’s analysis.

Larger firms tended to be better equipped to administer the scheme, the report said.

The NAO said the Government’s challenge now was to wean the property market off the scheme, which was launched in April 2013.

Research found 37% of households would not have been able to buy any property without the scheme.

But nearly a third (31% ) of buyers could have purchased a property they wanted without the scheme.

81% – Percentage of buyers supported by the Help To Buy equity loan scheme in England who are first-time buyers

And some buyers could have bought a property without the support of Help to Buy, but not necessarily a property they wanted.

 Around 4% of the 211,000 buyers who had used the scheme by December 2018 had household incomes of over £100,000.

Over the whole scheme, which is not means-tested, 10% of buyers had household incomes of over £80,000, or over £90,000 in London.

Commenting on the report, Fran Boait, executive director of campaigning body Positive Money, said: “It’s now beyond clear that rather than helping those who can’t afford to buy a home, Help to Buy has mainly been a subsidy for a housing bubble, benefiting property developers and existing home owners.”

The NAO’s analysis found that buyers who had used Help to Buy had paid less than 1% more than they might have paid for a similar new-build property bought without the support of the scheme.

(Help to Buy) has exposed the Government to significant market risk if property values fall, as well as tying up a significant public financial capacity

Gareth Davies, head of the NAO

By 2023, the net amount loaned through the scheme is forecast to peak at around £25 billion, with the investment expected to be recovered by 2031/32 and a positive return made overall.

But the NAO said the investment was exposed to significant market risk as it was sensitive to house price changes and the timing of buyers repaying loans.

It said there was also a cost in terms of opportunity in tying up money for a considerable period, rendering it unavailable for other housing schemes or priorities.

The scheme was launched by what is now the Ministry of Housing, Communities and Local Government.

Home buyers receive an equity loan of up to 20% (or 40% in London) of the market value of a new-build property. They are not charged loan fees on the loan for the first five years of owning their home.

Between the start of the scheme in April 2013 and September 2018, 38% of all new-build property sales were supported by loans through the scheme, accounting for around 4% of total house purchases across England during this time.

Around 81% of all buyers supported by the scheme were first-time buyers.

It was announced in 2018 that from April 2021, the revised scheme would be restricted just to first-time buyers, with lower regional limits on the maximum house purchase price.

The NAO said changes to the scheme aimed to reduce overall demand for it in its final two years, preparing the housing sector for its end in 2023.

Take-up of the scheme had been lower in London, where average house price-to-earnings ratios were higher, compared with the rest of England, the NAO’s report said.

Gareth Davies, head of the NAO, said: “Help to Buy has increased home ownership and housing supply, particularly for first-time buyers.

“However, a proportion of participants could have afforded to buy a home without the Government’s help.

“The scheme has also exposed the Government to significant market risk if property values fall, as well as tying up a significant public financial capacity.

“The Government’s greatest challenge now is to wean the property market off the scheme with as little impact as possible on its ambition of creating 300,000 homes a year from the mid-2020s.

“Until we can observe its longer-term effects on the property market and whether the department has recovered its substantial investment, we cannot say whether the scheme has delivered value for money.”

A spokesman for the Home Builders Federation (HBF) said Help to Buy has delivered against its objectives, to increase home ownership, boost housing supply and generate economic activity.

He said: “Help to Buy has been central to supporting new-build sales rates, and thus the construction of desperately needed homes, while the wider second-hand market has remained sluggish.

“At present, the mortgage market is not equipped to support realistic lending to first-time buyers purchasing in the new-build sector.

“We will continue to work with lenders and stakeholders to try and ensure the withdrawal of Help to Buy does not lead to reduced housing supply or first-time buyer aspiration.”

Housing Minister Kit Malthouse said: “Help to Buy has been genuinely life changing for first-time buyers across the country, helping them secure their first step on the property ladder.”

He said the scheme has been “win-win” – supporting first time buyers, increasing home building and also set to make a profit for the public.

He said: “From 2021 the scheme will be extended and strengthened to make it exclusively for first-time buyers to support those who need it most.”

Source: Shropshire Star

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West Midlands third for Help to Buy sales

The West Midlands has had the third highest number of homes in England sold through the Help to Buy equity loan scheme since its launch five years ago.

More than 169,100 completed Help to Buy equity loan purchases have been made since 2013 worth an estimated £42.2 billion.

The figure for the West Midlands was 7,074, with Birmingham the area with the most at 1,532.

Of all purchases nationally, 81 per cent were made by first-time buyers.

The scheme is set to run until 2021, although it has been under scrutiny with claims it is enabling people who can afford to buy without the equity loan to climb on to the property ladder with just a five per cent deposit, thus driving up property prices.

Homelessness charity Shelter analysed the increased amount of mortgage lending in correlation to the scheme and concluded Help to Buy has increased the average home price by £8,250.

Housing experts at carried out the research to find out which counties in England have had the most and least completed Help to Buy equity loan property purchases.


It found that London was top with 12,206 and Greater Manchester second with 7,280. Staffordshire had 3,737.

Within the West Midlands Sandwell had 991 sales, Walsall 922 and Dudley 753.

The Government launched the Help to Buy equity loan mainly to help people step on to the housing ladder. It allows buyers with a minimum five per cent deposit of a property value to secure an interest-free loan of a further 20 per cent in England and Wales for the first five years.

The loan is only available on new-build homes up to £600,000.

The Government id currently deciding on the future of Help to Buy.

The Home Builders Federation says the scheme has been an “unmitigated success”, with 81 per cent of those helped having been first-time buyers.

Source: Express and Star