According to figures from the Department for Levelling Up, Housing and Communities (DLUHC), the scheme has supported the purchase of properties worth £2.5bn. The equity loans issued during the period totalled £604m.
The scheme was revised in April last year, restricting the use of Help to Buy to first-time buyers only and regional price caps were introduced.
The DLUHC said the price restrictions contributed to the reduction in completions across all regions except London where the limit was maintained at £600,000.
Rhys Schofield, managing director at Peak Mortgages and Protection: “It’s unsurprising that numbers are a bit down on 2019 as we’ve had regional price caps introduced since then and those are really starting to bite in some parts of the country. House price rises in some areas have outstripped the cap.
“With house prices growing at, say, 10 per cent a year the government is doing very well out of the scheme, too. Their value of the share they have in people’s homes has also gone through the roof.”
The East of England and the South East saw some of the sharpest drops in completions following the new version of the scheme. The East of England reported a decline from 2,104 in Q1 2021 to 1,530 in Q2, while the South East reported a fall from 3,059 in Q1 to 2,303 in Q2.
In London, the quarterly declines were not as severe with completions exceeding 1,000 in Q1, Q2 and Q4.
Compared to Q3 2021, overall completions in Q4 were up by 22 per cent.
Property price and type
Price caps also inevitably reduced the average value of properties purchased through the Help to Buy scheme.
Compared to Q1 2021, the last full quarter of the previous scheme, the mean property price was down in all regions in Q4. The largest decrease was in the North East and North West, where the mean property price reduced by 30 per cent and 27 per cent to £161,842 and £190,867 respectively.
The overall average value of homes purchased through the scheme in England fell from £329,254 in Q1 to £285,293 in Q4.
Compared to previous years, 2021’s Q4 average value was down on 2020’s £320,811 and 2019’s £300,534.
Across the whole of 2021, the average value of a home purchased using Help to Buy came to £305,669.
There was a lower proportion of four or more bedroom properties sold under the current Help to Buy scheme, which the DLUHC said was expected due to the lower proportion of detached properties purchased.
Some eight per cent of properties sold had four or more bedrooms compared to 28 per cent under the scheme in 2016.
Meanwhile, the proportion of two-bedroom properties purchased rose to 32 per cent under the current scheme compared to 22 per cent under the previous scheme.
Deposit and income
The average household income for those using Help to Buy in Q4 2021 was £54,309, up from £53,831 in Q3.
For London-based purchasers, this was pegged at £68,245 in Q4 up from £67,108 in Q3. For buyers in England excluding London, this was nearer to the overall England average, with typical household incomes of £51,972, almost flat on £51,330 in Q3.
Compared to previous years, the overall average household income was higher in Q4 2020 at £61,874 and in 2019 was £57,570.
In total, the average income for those using Help to Buy in 2021 came to £58,169, down on £60,781 in 2020.
The average deposit percentage for the new version of the scheme was lower than the previous version across all regions. The DLUHC said this suggested Help to Buy was being used by more people who had smaller savings.
Additionally, the size of the deposit has fallen compared to the older version of the scheme.
For example, buyers in the South West put down an average 10 per cent deposit in Q1 last year, equivalent to £31,813, but in Q4 this dropped to a nine per cent deposit worth £22,106.
In the North East, this fell from an eight per cent deposit worth £20,539 in Q1 to a seven per cent deposit worth £11,386 in Q4.
London saw the smallest difference, likely due to the maintained price cap, with an average deposit percentage of nine per cent worth £41,256 in Q1 2021, to nine per cent in Q4 worth £40,275.
Stuart Powell, managing director of Ocean Mortgages, said homebuyers were being more creative with deposit raising.
He added: “Rather than entering a government-run scheme that shares in the growth of their property value, buyers are turning to ‘The Bank of Mum and Dad’, or ‘Nan and Grandad’ to fund their deposits. During 2021 and the first quarter of 2022, equity release experienced a growth boom, a significant portion of which was used for house deposits. This has become a viable alternative to Help to Buy and partly explains the reduction in Help to Buy loans.”
Government and developers reaping gains
From the scheme’s introduction in 1 April 2013 to 31 December 2021, 355,634 properties have been bought with a Help to Buy equity loan.
The total value of these equity loans so far totals £22bn while the value of properties stands at £99bn.
Paul Neal, equity release and mortgage adviser at Missing Element Mortgage Services, said it would be interesting to see the change in the value of loan repayments.
He added: “I had a client this week who originally borrowed £36,000 through the scheme and over the past five years their property’s value has increased and now they have to pay back £48,000. That’s £12,000 over a five-year period. Now, times that by 355,634 properties and that will fund a lot of parties in Downing Street in the coming years.”
Lewis Shaw, founder of Shaw Financial Services, added: “With rates rising, incomes stagnating, and a lot of Help To Buy loans maturing this year, and for the next couple, many borrowers could find they aren’t in a position to remortgage and pay off the government loan. This will mean one of two things: either sell up and move somewhere else or get stuck paying interest on the Help to Buy element until they can repay that debt.
“The only people that have really benefitted are developers and their shareholders in bumper dividend payouts and the government who have piggy-backed on soaring property prices rises which they engineered themselves. Or maybe I’m just too cynical.”
