The government’s £10 billion Help to Buy scheme has supported 270,000 households either get onto or up the property ladder since it was launched in 2013.
Help to Buy is both popular and also controversial – up to 60% of newbuild properties in some developments are now bought via the scheme, and it generates 15% of all mortgage-backed purchases of newbuilds.
The government, worried by its exposure to the risks of bankrolling so many homeowners, is now planning to phase out the scheme between now and March 2023.
“The scheme has been very successful in helping first-time buyers to bridge the deposit gap and get on the housing ladder,” David O’Leary, Policy Director at the House Builders Federation.
The scheme was due to end in March this year (2021) but has now been extended until 2023 but is only available as an equity scheme for first time buyers.
In the past, four fifths of buyers have been first time buyers and the rest have been people moving up the property ladder.
But the scheme has its detractors, who claim that it is a back-door subsidy for developers entices first time buyers to buy new-build properties at a considerable ‘premium’ and helps maintain the UK’s often high house prices, making it more expensive for those purchasing properties outside the scheme.
Victoria Farrar, Associate Director for Cushman & Wakefield, disagrees: “Help to Buy is enabling more people to get on the property ladder with a lower deposit and gives them the opportunity to live where they actually want to live.
“So even if the stats state that you are paying on average 12% more for your home, this is probably a risk that most buyers are willing to take.”
How final scheme works
Who: First time buyers only.
What’s the deal: Buyers save a 5% deposit and then borrow up to a maximum of 20% (40% in London) of the full purchase price of a newbuild home.
When: Purchases must complete by the end of March 2023
How much: There are price caps - £600,000 within London but much less outside the capital, depending on where you live.
These are:
East of England £407,400
East Midlands £261,900
North East £186,100
North West £224,400
South East £437,600
South West £349,000
West Midlands £255,600
Yorkshire and The Humber £228,100
How do I find a Help to Buy property: Through the network of regional and local agents around the UK.
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