Property in: LONDON

Help-To-Buy Limitations See The Scheme Declining

3 minutes

The new build property market sees a gradual decline in the Help-to-Buy scheme because of the limitations, the recent data by Unlatch revealed.

The Help-to-Buy scheme launched in 2013 and helped many homebuyers step onto the property ladder with just a 5% deposit needed to secure a property. Until 2021, any buyer could take advantage of the scheme.

Currently, only first-time property buyers (FTBs) can apply for the Help-to-Buy Equity Scheme.

Help-to-Buy: A Short History

Property deals with the Help-to-Buy scheme were increasing gradually. England saw more than 38,000 property completions with the scheme in 2016, with a 36% spike to 52,000 in 2019. In turn, the total value of the scheme loans likewise jumped from £2.1bn to £3.6bn.

But the numbers have been slightly falling since the peak of the Help-to-Buy scheme. In 2020, property completions with the scheme fell by 5%, while equity loans dropped by 5%. The total value of the new Help-to-Buy homes likewise decreased slightly by 0.05%.

Moreover, the market data from 2021 suggests even greater declines in 2021. For instance, the Help-to-Buy property completions fell by 10%, while home values decreased by 12%.

Developers And Help-to-Buy

Researchers at Unlatch also analysed the importance of the Help-to-Buy scheme for major property developers like Barratt, Persimmon, and Taylor Wimpey. The core finding is that the number of new Help-to-buy homes from the developers entering the market fell by 18% between 2019 and 2020.

It is worth mentioning that the share of Help-to-Buy homes to the total completions has risen from 38% in 2019 to 43% in the following year.

Expert Comments

Unlatch confirms a significant impact of the Help-to-Buy scheme on the property market. Naturally, we see a gradual decline in the volume of the scheme as we see its second phase in full swing.

Several factors drive this trend, including the scheme limitations. Currently, only first-time buyers qualify for the Help-to-Buy new homes. Moreover, developers are managing their output according to the end of the scheme in 2023.

First-time property buyers

In turn, the pandemic has also affected the Help-to-buy property completions as the whole market suffered. While this negative trend is reversing, we are yet to see if new homes with the Help-to-buy scheme will gather momentum once again.

However, the scheme is still a major focus for real estate developers in the UK. In fact, the share of Help-to-buy properties to the total output has increased between 2019 and 2020. When the scheme ends in 2023, it will leave a sizable hole in the market. However, it will be filled with new initiatives from the government to sustain and develop the property market.

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