And with the scheme closing for new applications on 31 October 2022, and lots of speculation about what (if anything) will follow, let’s reflect on what the scheme has done to support homeownership over the past nine years.
Since its launch on 1 April 2013 up until 31 March 2022, 361,075 properties were purchased using the Help to Buy equity loan, equating to around 3.8 per cent of all residential property transactions, which totals £22.5bn worth of equity loans. To put that into context, if we divvied that up between the population of England in 2021, that’s approximately £442.49 for every person.
The scheme originally launched on 1 April 2013, providing a 20 per cent (40 per cent in London) equity loan to help purchase a new-build property, interest-free for the first five years. In addition to the boost of borrowing, Help to Buy applicants generally benefitted from greater affordability compared to what they could have borrowed without it. This has caused some debate over the years. The scheme changed in 2021, with new eligibility criteria and regional price caps, including restricting the scheme to first-time buyers only, which previously had made up 82 per cent of all loan completions.
The beneficiaries
So, who exactly has Help to Buy helped?
The average household income of cumulative completions throughout the scheme’s duration has been £40-50,000, which is above the average household income in the UK.
And over the nine-year scheme, the average house price of properties sold was £279,000; most recent provisional data (Q1 2022) shows the average Help to Buy house purchase was £320,000. Both the nine-year and the current average are higher than the average cost of a first home purchase in the UK, £264,000 in 2021.
This provides some much-needed context when we think about the households and indeed homes up and down the country which Help to Buy has indeed ‘helped’.
A friendly farewell
It’s understandable that for a while some of us were worrying about the sudden cliff edge reaching the end of Help to Buy, and it certainly featured heavily in the press. However, in my view, the end of Help to Buy is more of a friendly farewell than a dramatic send-off. The restrictions to the scheme have certainly contributed to a gradual tailing off of applications.
In Q1 2022, Help to Buy completions were down 65 per cent compared with the previous year, and 48 per cent when compared to Q1 2019. The data for Q2 has not yet been released at time of writing, however I imagine the same trajectory will follow, that’s certainly the case when I look at our own Help to Buy application data here at Skipton.
Reflecting on the past nine years, in my opinion, we have a lot as an industry to thank Help to Buy for, indeed I myself would not have made it onto the ladder without the scheme.
Absolutely, like all well-used resources, it has not been without the odd flaw or bump in the road. As lenders, and certainly here at Skipton, we will continue to innovate and support the new build and indeed first-time buyer market as we launch into life without Help to Buy.
