Alastair Stewart, an analyst at Stockdale, said that being available through the Help to Buy scheme is being marketed as an incentive in and of itself, as an alternative to other incentives such as discounts on the list price or added features. He said “Help to Buy was presented to buyers as ‘the incentive’… even though the housebuilder bears no risk whatsoever”.
Stockdale added that the apparent Help to Buy premium is at its highest in areas in the north, and warned that buyers there are at serious risk of falling into negative equity unless market conditions improve. He added that it was “almost totally inconceivable” that the majority of buyers using the London Help to Buy scheme will ever have sufficient equity levels to move to a larger home within the city.
Helen Pierson, head of business development at Mortgage Bureau, said she was not aware of a Help to Buy premium per se, but said it is reasonable to expect new-build homes to attract a price premium of some kind.
She added: “I think it would be naive in the extreme to suggest that buyers don’t know that they are paying more for the privilege of something new or that they are not readily accepting of this. Houses are no different and developers invest hugely in their product ranges so as to ensure that they are delivering houses that are attractive ‘blank canvasses’, in tune with modern day living and with the highest possible energy efficiency.”
Brokers are united in their concern around the lack of options when it comes to Help to Buy borrowers looking to remortgage. Data from financial information site Moneyfacts suggests that currently just a handful of lenders offer remortgage deals for Help to Buy borrowers, which intermediaries are clear must be addressed.
Pierson said that lenders failing to step up to meet demand was “particularly disappointing” as more and more Help to Buy purchasers are entering mortgage review periods, but remortgage options remain meagre.
She added: “It’s particularly galling to see lenders keen to attract huge sways of Help to Buy purchase business notable by their absence. These customers deserve the same choice as every other homeowner when it comes to the end of their current product and at the moment they’re not getting a fair crack of the whip.”
Mortgage Solutions exclusively revealed in June that the Homes and Communities Agency is now working alongside the industry to improve remortgaging options.
News reports last week suggested that the government was considering bringing the equity loan scheme to an end ahead of its current 2021 end date, though the Department for Communities and Local Government has now ruled that out, saying: “We remain committed to the Help to Buy equity loan scheme to 2021, ensuring it continues to support homebuyers and stimulate housing supply. The government also recognises the need to create certainty for prospective home owners and developers beyond 2021, so will work with the sector to consider the future of the scheme.”