'Govt should extend housing schemes to stimulate economy'

Propertymark research showed that more than 300,000 properties were bought under the scheme, most of which were first-time buyers, which we know is crucial to keep the market moving. 

The Help to Buy scheme has had its critics though, with concerns that developers have increased prices to capitalise on those receiving the discount and buyers being limited to purchasing just new builds, leading to questions as to whether these are the reasons to why it has not been renewed. 

The more money a buyer borrows to purchase their home, the higher the rate of interest they will pay.

Despite the UK government’s levelling up goal that “by 2030, renters will have a secure path to ownership with the number of first-time buyers increasing in all areas”, home ownership is becoming an increasingly distant goal for many young people.

And without help from the UK government, some are forced to continue to turn to the bank of mum and dad, who in some cases no longer have the funds to support their children. 

The scheme, which ran initially from 2013 to 2021 and then an amended version from 2021 to 2023, allowed purchases of a new build home with a loan of up to 20 per cent of the value of a property (40 per cent in London).

This was a huge helping hand of nearly a quarter of a million pounds for home-buyers in London, especially when considering that the majority of people using the scheme were under 35.

What other options are there?

There are still options for people looking to purchase their first home, but unfortunately these do not offer the same freedoms as the Help to Buy scheme. 

The government’s Mortgage Guarantee scheme aims to help first-time buyers and homeowners looking to move the opportunity to move with a lower deposit.

The government offers security to banks for 95 per cent mortgages with a buyer’s 5 per cent deposit and was introduced in an attempt to encourage banks to start offering 95 per cent mortgages again after nearly all were withdrawn during the pandemic.

However, generally speaking, the more money a buyer borrows to purchase their home, the higher the rate of interest they will pay, so given current interest rate rises, this may not be a preferable choice for some that wish to move. 

Home ownership is becoming an increasingly distant goal for many young people.

The First Homes scheme provides a discount for buyers on a new build property or a previous First Homes property in England, this scheme is dependent on your local authority, and some will set criteria to prioritise the scheme for certain groups such as essential workers, people who already live in the area or those on lower incomes. 

Although the discount is generous, offering 30 to 50 per cent of the value of the property, this scheme comes with limitations. Homeowners can only sell their First Homes property onto someone who is also eligible for the scheme and at the same percentage discount as they bought it, with some mortgage providers being wary of lending under it.

Shared Ownership is another way to put a foot on the property ladder, but buyers should be aware of the various costs associated with it, particularly given the current rising costs of mortgage interest, and rent increases. 

Shared Ownership allows home-buyers to purchase a percentage of the property and rent the remaining portion from a social housing provider.

This gives the buyer some security of tenure for a much smaller initial outlay, but they will be liable for their own home maintenance and other costs such as service charges, which can become costly for those on lower incomes. 

By extending the Help to Buy scheme to second-hand homes, the government would create demand and further stimulate the economy.

Many, but not all, Shared Ownership purchases can be staircased, meaning that the homeowner can increase the percentage they own over time which will in turn decrease the amount of rent paid.

But similarly to the First Homes scheme, many will have stipulations limiting who can purchase the property if it is sold on and not all mortgage providers will lend under the scheme.

Propertymark is wholly in favour of incentives that enable first-time buyers and those on lower incomes to get into the property market.

However, it is also important that government policies support all home movers and Propertymark has previously advocated for the government to extend the Help to Buy scheme to second-hand homes. 

By extending the Help to Buy scheme to second-hand homes, including new builds put up for resale, the government would create demand and further stimulate the economy as it would increase a housing sale chain from one to at least three and possibly five other transactions. 

Furthermore, after calling for action we are pleased that the government has unveiled its taskforce chair to boost older people's housing, but fundamentally following reduced rates of stamp duty to support the economy during the pandemic, surely it is now time for the government to review its impact and set out a roadmap for reform?

Rose Forman is a policy and campaigns officer at Propertymark