Northampton’s property market is so dependent on HTB that 97.1% of new builds were sold under the scheme last year, according to a study by modular homes developer Project Etopia.
The scheme will end in 2023, but faces new restrictions in 2021 when it will become available only to first-time buyers and regional price caps will be imposed.
More than half of all new-build property purchases in England were funded by the government-backed Help to Buy equity loan scheme last year.
HTB was used in conjunction with 52,057 (51.9%) of 100,399 new build purchases2, reinforcing concerns that when the Government-backed scheme comes to an end, the nationwide housing market will be dealt a serious blow.
Reliance on HTB is even more acute in England’s major towns and cities. Among the 105 locations in the Etopia study, 20,179 (54.6%) of the 36,950 new build sales in these areas were funded by HTB.
Help to Buy hotspots include Burnley, Derby and Warrington, where more than 90% of new builds were purchased with the scheme. In Burnley, only 6.9% of new builds were sold without HTB, in Derby the figure was 7.6% and in Warrington 8.6%.
With Help to Buy, the government lends up to 20% of the cost of a new-build home, so the purchaser has to raise just 5% as a cash deposit, plus secure a mortgage to cover the remaining 75% of the purchase price. In London, the value of the equity loan can be up to 40%.
The highest number of Help to Buy new builds were sold in Wakefield, West Yorkshire, with 740 but the lowest number was in Eastbourne, East Sussex, where just one new build was sold under the scheme in 2018.
In leading regional cities such as Birmingham, Liverpool and Manchester, more than a quarter of all new-builds were sold through Help to Buy. In Birmingham the proportion was 27.7%, Liverpool 25.4% and Manchester 39.4%.
The location least reliant on HTB was Cambridge where only 17.7% of new builds were bought through the scheme.
Joseph Daniels, CEO of Project Etopia, commented:
“Building more homes is the long-term solution to the housing crisis, not a free leg up.
“This startling research shows just how far Help to Buy is underpinning and driving the new build market across the whole of England.
“There is a danger that, once the scheme ends, the rug could be pulled out from beneath those areas that have come to rely on Help To Buy to too great a degree.
“This study gives us an early indication of which markets will be most-resilient when the scheme comes to an end.”
