The latest statistics released by the Ministry of Housing, Communities and Local Government have revealed that 2018 was another successful year for the scheme.
According to the figures released, 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% to 40% 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%.
Shaun Church, Director at Private Finance comments: “The record number of property completions using the Help to Buy equity loan scheme in 2018 is proof that high loan-to-value (LTV) products have a welcome place in today’s market. Outside of the scheme, availability of 5% deposit loans is improving, and given the stringent affordability tests in place the market should not shy away from providing more of these options.
Today’s housing market is working in favour of first-time buyers. Though accumulating a deposit still remains a challenge, there are now numerous schemes and initiatives designed to give new buyers a leg up onto the property ladder. More than 90,000 property completions benefited from a Help to Buy ISA in 20181 and stamp duty relief is significantly cutting costs for first-time buyers. Making clever use of mortgage options – such as by opting for longer-term or higher LTV products, and locking into low rates – is another way first-time buyers can achieve their homeowning ambitions. Speaking to a mortgage broker to get a whole-of-market view is therefore essential.”
Kate Davies, Executive Director of Intermediary Mortgage Lenders Association, had this to say: “The statistics for 2018 highlight a very successful year for Help to Buy, with the scheme having helped 1,000 households every week over the year (and 143 households a day) to get on the property ladder. The Government’s programme has continued to stimulate the bottom of the housing ladder and indirectly support the whole of the UK property sector throughout 2018.
With as many as one in every seven first-time buyers using Help to Buy in England in 2018, it is likely that the programme will remain invaluable in supporting home buyers over the remaining years of scheme, and will play a crucial role in helping to keep the housing market on an even keel during a period of heightened uncertainty as a result of Brexit.
While we are yet to see if the programme is continuing to grow in 2019, strong HMRC transaction statistics for Q1 2019 possibly indicate that Help to Buy-fuelled sales are still running at a healthy pace, continuing the trend we have been witnessing for more than a year.
MHCLG has made it clear that HTB will come to an end in 2023 and that it is looking to lenders and developers to come up with alternative products for first-time buyers and second movers. The challenge to the industry is clear and IMLA will assist wherever possible in facilitating discussions and proposals.”
Craig Hall, Head of Broker Relationships and Propositions, Legal & General Mortgage Club, comments: “Having exceeded the 200,000 mark and with the number of completions up 12% compared to 2017, today’s results demonstrate the vital role Help to Buy continues to play in our housing market. The scheme has not only enabled housebuilders to deliver more homes, but it is consistently supporting the buyers who need it most – with first-time buyers accounting for 81% of total purchases.
Looking beyond the scheme’s end it’s vital that Government and industry works together to ensure these buyers remain supported. It’s likely that we may see private schemes coming to market to help fill the void, however during the previous Legal & General New Build Forum, the Ministry of Housing, Communities and Local Government hinted they are considering alternative schemes to Help to Buy.
We’re already seeing a wave of innovation from lenders to help first-time buyers, with a return to higher loan to value lending and the introduction of family assist mortgages. Any would-be borrowers looking to buy their first home and considering using Help to Buy should speak with a mortgage adviser. These professionals have an in-depth knowledge of the schemes and products available on the market, ensuring borrowers find the right solution for their unique circumstances.”