The Office for National Statistics said between 1 July and 30 September 2021, 7,270 properties were bought with a Help to Buy equity loan, a fall of 39 per cent compared to the same period in 2019.
The total number of completions during the three months to September were down by 33 per cent when compared to the previous quarter. Equity loans during the period amounted to £498m, which was used to purchase properties with a total value of of £2.06bn.
Between its introduction on 1 April 2013 and 30 September 2021, 346,656 homes have been purchased using the Help to Buy equity loan. The total value of equity loans so far has totalled £21.4bn and properties sold under the scheme have a combined worth of £96.4bn.
Help to Buy equity loans were introduced on 1 April 2013 as a means for helping buyers purchase new-build properties and allowed eligible applicants to borrow an equity loan worth up to 20 per cent of the value of a property which was repayable when the property is sold.
In 2020 the government announced changes to the scheme, which came into effect on 1 April 2021. The scheme is similar to the 2013-2021 scheme but is limited to first-time buyers and the purchase price of the properties is capped by region.
Help to Buy ISA use
The Help to Buy ISA, which is not mutually exclusive to the Help to Buy equity loan, has helped to fund 460,567 property purchases between 1 December 2015 and 30 September 2021.
Since it launched, the scheme has paid out 604,720 bonuses totalling £674m. The average bonus value was £1,115 and the highest number of property completions with the support of the scheme has been in the North West, with the lowest numbers in the North East and Northern Ireland.
The mean value of a property purchased using the ISA was £175,680 compared to an average first-time buyer house price of £225,607 and a national average house price of £269,945.
The ONS said the median age of a first-time buyer in the scheme was 28 compared to a national median age of 30.
The Help to Buy ISA scheme was available through banks, building societies and credit unions and enables people saving for their first home to receive a 25 per cent savings bonus from the government when they buy a property of £250,000 or less; with a higher price limit of £450,000 in London.
This means that for every £200 saved, first-time buyers can receive a government bonus of £50. The maximum government bonus is £3,000.
The Help to Buy ISA scheme is administered by National Savings and Investments (NS&I) and was closed to new accounts on 30 November 2019 but account holders can continue saving into their account until 30 November 2029 when accounts will close to additional contributions.
The Help to Buy ISA government bonus must be claimed by 1 December 2030.
Myron Jobson, Senior Personal Finance Analyst, interactive investor, said it would be unfair to call the Help to Buy ISA a failure, but “a stretch to call it a success”.
He said: “Every little helps when it comes to purchasing a home, but the average bonus of £1,115 barely covers home survey and legal fees as well as other costs associated with buying a property.
Jobson pointed out the Lifetime ISA, which succeeded it, offered more generous benefits for those who know without a shadow of a doubt that their savings will be used towards purchasing a property.
“That said, there is now a dizzying array of ISAs available on the market – a simple tax wrapper has become complicated. For example, with the Lifetime ISA taking centre stage from the H2B ISA, many savers who opened a H2B ISA have seemingly forgotten they have one, with a great number of these ISAs sitting dormant and waiting to be brought back to life.
House prices risk making Help to Buy obsolete
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown said rising house prices were overtaking the Help to Buy ISA limits.
She pointed out that when the Help to Buy ISA was launched in December 2015, the average price paid by a first-time buyer was less than £175,000, so the limit of £250,000 (and £450,000 in London) gave buyers plenty of scope to find the home they wanted.
“In the seven years since, the average first-time buyer price has risen more than a quarter to over £225,000 and the limits haven’t moved an inch. As a result, we’re getting perilously close to the day when nobody using the scheme can afford to buy an average starter home. It means that people who started a Help to Buy ISA in good faith back in 2015 could get to the point of purchase and realise they won’t get the bonus they were expecting.”
“The government needs to reconsider the limits on the Help to Buy LISA, and the Lifetime ISA. Setting a fixed limit and then walking away to leave buyers to wrestle with rising prices isn’t good enough.”
