Help to Buy  

The Help to Buy scheme is on the decline

The Help to Buy scheme is on the decline
Photo by Karolina Grabowska [Pexels]

The Help to Buy scheme seems to be on the downturn as it approaches its final year, according to research.

The research created by Unlatch, incorporates data from the UK’s three largest housebuilders Barratt, Persimmon and Taylor Wimpey.

Launched in 2013, Help to Buy has been helping homebuyers onto the property ladder via the new-build sector with a 5 per cent deposit, with the first phase (2013-21) allowing any buyer to take advantage. However, only first-time buyers qualify for the current version, the Help to Buy Equity Scheme. 

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There were 38,411 Help to Buy property completions in England, during 2016. This figure increased consistently year on year, until finally reaching a peak of 52,247 in 2019, showing a 36 per cent increase as compared to 2016. 

Yet, more recently, the volume of Help to Buy homes reaching the market, the market value of these homes and the value of loans being issued, have all been on the decline.  

In 2020, house completions dropped by 5 per cent, while the value of equity loans took a slight decline by 0.5 per cent and the total value of help to buy properties showed a drop of 0.05 per cent. 

Unlatch has estimated more significant declines in the Help to Buy sector, with there being a 10 per cent drop in Help to Buy completions in 2021. The value of loans fell by 9 per cent and the total market value of  Help to Buy homes was down by 12 per cent. 

Jeremy Leaf, former RICS residential chairman and North London estate agency owner, said: “The Help to Buy scheme has proved to be incredible support especially among first time buyers and has been a great benefit to homebuilders too, it is due to end April next year, and that decision is already having an impact on forward plans of developers, who are nervous about being able to take advantage of the support that help to buy offers”.

When discussing the impact that the end of the scheme will bring, Leaf said: "It's going to reduce supply. Developers are going to be nervous about selling in the open market to first time buyers as they are not eligible, some buyers are highly dependent on this scheme, I hope the government realises the impact, on suppliers and on consumers". 

The research looked further into the prominence of Help to Buy with assistance from housebuilders Barratt, Persimmon and Taylor Wimpey.

Finding that, as a collective, the number of Help to Buy homes delivered to market by these three housebuilders fell by 18 per cent between 2019 and 2020. 

Yet, one must consider that the percentage of total completions that Help to Buy homes accounted for had actually increased, from 38 per cent in 2019 to 43 per cent in 2020.