The government’s Help to Buy scheme is still playing a major role in helping first time buyers get a foot on the property ladder. Under the scheme, first-time buyers and second-steppers are offered a loan of up to 20% of the price to buy a new-build property of up to £600,000. A London-only version of the scheme provides 40% equity loans.

The 2018 Budget contained details of how the Help to Buy scheme is to operate in the future. Until 2021, anyone taking advantage of a Help to Buy equity loan to boost their purchasing power, can buy a property worth up to £600,000. Thereafter, and for a maximum of two years, only first-time buyers will be eligible to buy through the scheme, and the maximum property values will be restricted, with differing figures in place around the country to reflect regional house price variations.

Help to Buy is still promoted a great invention by the Government and this could be agreed upon, but what the future holds for the new build market after the scheme ends could also taint its legacy, with some predicting the property market will slow drastically and even some properties deemed to be over priced.

But how is it currently performing?
The latest figures from the Ministry of Housing, Communities and Local Government showed that:

  • Over the period since the launch of the Help to Buy: Equity Loan scheme (1 April 2013 to 31 December 2018), 210,964 properties were bought with an equity loan.
  • The total value of these equity loans was £11.71 billion, with the value of the properties sold under the scheme totalling £54.48 billion.
  • Most of the home purchases in the Help to Buy: Equity Loan scheme were made by first-time buyers, accounting for 171,053 (81 per cent) of total purchases.
  • The mean purchase price of a property bought under the scheme was £258,223, with buyers using a mean equity loan of £55,498.
  • In London, the maximum equity loan was increased from 20 per cent to 40 per cent from February 2016, and since then to 31 December 2018, there were 12,511 completions in London, of which 10,635 were made with an equity loan higher than 20 per cent

These figures highlight how invaluable this initiative has been for many homebuyers since its introduction, and how the take-up is unlikely to slow-down anytime soon. Considering this growth, buyers need to be aware of all their borrowing options, both inside and outside of this scheme.

Help to Buy has benefitted from an increased profile in recent times and this has helped more FTBs recognise its attributes – which is a good thing – although it’s prudent to point out that it should not be considered an all in-compassing solution. And, on the flip side, despite this rise in lending prominence there are still pockets within the market where it can prove valuable for a certain type of borrower which often goes overlooked.

Although most mainstream lenders are known to offer Help to Buy schemes, some of the more specialised less known lenders, are also busy in the market providing lending for borrowers with adverse credit, even including bankruptcy’s and IVA’s, again proving that Help to Buy has been popular across many streams of lending to help people get onto the property ladder and will continue do so for a while yet.