According to data from the Department for Communities and Local Government (DCLG) 13,700 Help to Buy loans were completed between April and June totaling £860m, the highest since the programme began in early 2013.
However, questions have been raised about the effectiveness of Help to Buy (which offers buyers up to 20% in an equity loan so they only need to provide a 5% deposit) and its impact on the wider housing market.
The Help to Buy scheme has encouraged more new homes to be built but rates still remain well down on historic highs and the numbers needed to meet demand.
Since the last set of results were published it has also emerged that builders are adding a Help to Buy premium to developments and according to estate agent research the higher value loans available in London are distorting the market.
The government has also confirmed it will continue to operate the scheme until 2021, but has not committed to a further extension as builders have requested.
More debt
Search Acumen director Andy Sommerville noted: “Borrowers had to take on more debt than ever to make their homeownership dreams a reality. In London in particular, many first-time buyers are resorting to taking on equity loans of up to 40%.”
“In an age where our younger generation is being saddled with breath-taking amounts of debt, we have to question how much more they can handle, no matter how well-meaning the support schemes may be.
“It all boils down to the fact that our first-time buyers are scrambling to buy too few homes at too high prices. The only way we’ll be able to support first-time buyers without the spectre of a lifetime of huge debts hanging over them is to build more homes,” he added.
TMA senior product and business manager Robert McCoy agreed that the scheme had not addressed the main problem blocking home ownership – a lack of affordable homes.
“Despite promises of more affordable housing, we’re not seeing enough properties being built across the country,” he said.
“Furthermore, due to economic concerns, second steppers are increasingly reluctant to put their properties on the market, meaning there are less second-hand homes available for first time buyers. To ensure a stable property market which is accessible to all, the government and industry must continue to promote these schemes as well as developing more.”
Support first-time buyers
More than 130,000 completions have now taken place through the Help to Buy Equity Loan scheme, with 83,686 using the ISA bonus since its launch in December 2015.
The most completions using the Help to Buy: ISA have taken place in the North West, Yorkshire and The Humber, and West Midlands.
In London, the Help to Buy scheme provides an equity loan of up to 40% and was used by more than 4,500 buyers between February 2016 and June 2017.
Housing and Planning Minister Alok Sharma said: “This government is committed to fixing the broken housing market and to help more people find a home of their own, with the support of a range of low cost home ownership products.
“Our Help to Buy: Equity Loan scheme continues to make home ownership a reality for thousands of households, right across the country.”
Home Builders Federation executive chairman Stewart Baseley added: “These latest figures are yet another sign that Help to Buy is achieving its objectives to support first-time buyers, increase housing supply and boost the economy.
“This help for first-time buyers is encouraging builders to invest, with permission being granted for more new homes than ever before. This investment by home builders is not just only giving tens of thousands of families a place to call home, it’s generating jobs and driving local economic growth in communities around the country.”
