New build scheme the key to unlocking home ownership for a quarter of a million people
Five years on from its introduction, Help to Buy sees housing supply soar while sustaining 150,000 jobs
New official statistics released today show that almost 50,000 households bought a home with support from the Government’s Help to Buy Equity Loan scheme in the last year, taking the total number of purchased through the scheme to 169,102 in the five years since it came into operation.
With 4 in 5 purchasers using Help to Buy to access home ownership for the first time, the scheme is transforming the lives of families around the country. Based on an average first-time buyer household size of 1.8 people, we can estimate that this initiative has now helped 246,000 individuals onto the housing ladder.
When Help to Buy was established in 2013, it was given three key objectives: improve access to low deposit mortgages for creditworthy households; increase supply of new housing; and make a contribution to the economy. On all three counts, the scheme has proven to be an enormous success, and all signs point to it continuing to be popular with buyers until its currently scheduled close in March 2021.
Boosting housing supply
Because Help to Buy is exclusive to new build homes, demand for new properties has increased and builders have increased the number of homes delivered to better meet this demand. Since Help to Buy was introduced in 2013, net housing supply has rocketed by 74% to similar levels seen in the 1950s, with further increases expected when official figures for 2017/18 are published in November. The extra demand for new homes has seen unprecedented increases in investment by house builders in land and labour with planning permissions up by 88% over this period.
Boosting the economy
The delivery of homes generates unparalleled economic and social benefits. Not only do new builds add to the housing stock, providing a home for a household and helping relieve pressure on the local housing market, house building benefits from relatively low import leakage, creating and sustaining more local jobs. A report by economic consultants, Lichfields recently found that each new home supports 3.1 jobs meaning that the 48,244 homes bought with Help to Buy last year helped to sustain an estimated 149,500 jobs on sites, in offices and through the supply chain.
Getting households onto the ladder
With an estimated 246,000 people making their first steps on the housing ladder thanks to Help to Buy, the scheme’s success outstrips any previous initiative of its like. And for many, it is the key that unlocks home ownership.
To date, the mortgage market is yet to provide high loan-to-value (LTV) mortgages even for households, meaning that without the support of Help to Buy many households would find home ownership further out of reach. In the first quarter of 2018, just 1 in 30 mortgage loans were at 90% LTV or greater. Effectively, the scheme de-risks loans for mortgage lenders on eligible properties, allowing them to lend, and lend at lower rates to creditworthy households.
Commenting on the new statistics, Stewart Baseley, Executive Chairman of the Home Builders Federation said:
“Help to Buy continues to make a huge contribution to housing delivery. By underpinning demand for new build homes, house builders are investing with confidence in new sites and employing more people to build tomorrow’s homes. The phenomenal increases in supply we have seen over the past five years would not have been possible without a scheme that has turned the dream of home ownership into a reality for so many. As the current expiry date for the scheme fast approaches, we are keen to continue working with policymakers to ensure that these benefits are sustained in some way beyond 2021 and bring much needed clarity for builders.”
Key Help to Buy statistics
- In the last year, 48,244 households were supported in buying a home through Help to Buy. 39,112 were first-time buyers.
- This takes the total number of completions for the scheme, over the first five years of its operation to 169,102. 81% of these households bought their first home thanks to Help to Buy.
- 40% of all homes purchased with support from Help to Buy have been bought for less than £200,000. 75% of buyers paid less than £350,000.
- In the first quarter of this year, exc. London, the median purchase price through the scheme was £250,000.
- The median purchase price for a Help to Buy home in London in Q1 2018 was £435,000.
- Median household income of a buyer was £49,257 in the first quarter of this year.
- 37% of all households using the scheme had incomes of less than £40,000 per annum. 74% of those had household incomes of less than £60,000.
- The average annual income for buyers in London has fallen since the introduction of the London Help to Buy scheme offering purchasers 40% equity loans – from £75,000 in Q1 2016 to £62,000 in Q1 2018 (-17%)
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Notes to editors
- The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. The HBF’s member firms account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: hbf.co.uk
- In 2016/17, 217,000 net additions were added to the dwelling stock, an increase of 74% on 2012/13