When the Help to Buy scheme was introduced in 2013, it allowed all households to purchase a new-build home with a deposit of just five per cent.

But last year, the scheme was restricted to first-time buyers, with price caps based on 1.5 times the average regional first-time buyer price, ranging from £186,100 in north-east England to £600,000 in London. Furthermore, the scheme is now set to end in March 2023.

So what impact have these changes had on people’s purchasing decisions?

According to official figures, Help to Buy sales more than halved across the country between October and December 2021 year-on-year, with just 8,913 completions.

There are many factors that could explain this decline, beyond it being restricted to first-time buyers. For example, there has been a shortage of properties in development in certain areas, pandemic related construction delays and rising house prices impacting on the number of properties falling within the price caps.

As the Help to Buy scheme winds down, it’s likely these factors will continue to hit sales in the coming months. However, the end of Help to Buy could prompt prospective house buyers to look at some of the alternative schemes that are currently available.

Shared Ownership
This option allows buyers to purchase a share between 10 and 75 per cent of the home’s full market value and pay rent to the landlord on the rest, along with monthly ground rent and service charges.

The Shared Ownership scheme has existed for more than 40 years, so it’s a well-established option.

Deposit Unlock
Devised in collaboration with lenders and the housebuilding industry, this scheme allows first-time buyers and current homeowners to purchase a new-build property with a five per cent deposit.

This is possible because the developer pays for insurance to reduce the lender’s exposure to risk. Many builders are involved but not many lenders at the moment. Read more here.

First Homes scheme
This new government scheme allows first-time buyers in England to purchase a home for 30 to 50 per cent less than its market value.

This can be a property bought from someone else who originally bought it as part of the scheme or a new home built by a developer. The scheme is currently in its second phase, which runs from 2021 to 2023 and is expected to deliver 1,500 homes during this time.

Mortgage Guarantee Scheme
Launched in April 2021, this government-backed mortgage scheme helps first-time buyers and current homeowners secure a mortgage with a deposit of just five per cent to buy a house of up to £600,000. This scheme comes to an end on December 31st.

Are house prices about to slow down?

Myths about Mortgages

According to Savills, Help to Buy and Shared Ownership have supported an average of 72,000 new homes sales every year. However, the organisation believes the alternative options may fail to match this figure.

Savills states that if these alternative schemes “fulfil their potential”, they could support the delivery of 50,000 homes a year

Where is the end of HTB having the biggest impact?
In the north-west there was a 67 percent decline when compared with 2019. Similarly, the north-east, West Midlands and Yorkshire & the Humber saw decreases of 57 per cent, 56 per cent and 52 percent respectively.

Why is this happening?
According to the Home Builders Federation (HBF), the biggest declines have been in the places where Help to Buy was particularly popular, such as Manchester, Newcastle and Cheshire, which it says isn’t a surprise.

As a result, the HBF believes making sure first-time buyers in particular can still access high loan-to-value mortgage products will be “essential if housing supply levels are to be maintained”.

However, we should stress that while many people use Help to Buy to solve deposit and affordability challenges, high loan-to-value mortgages only address deposit issues.

So whether the shortfall left by the end of Help to Buy can be fully made up by alternative property purchase schemes remains to be seen.

But one thing is certain – first-time buyers will still need help & advice to overcome the many affordability and home buying challenges they face in the coming months.