How much of an impact is Help to Buy having on the market in your area?
The National Audit Office has released some interesting graphics which you can use to see the impact in local detail.
For example, there are a number of regions where Help to Buy has enabled the purchase of houses, rather than flats.
In the north-east, between the start of the scheme in 2013 and the end of last year, there were 13,805 Help to Buy sales.
Almost all were houses, with just 417 purchases of flats.
Further south, the reverse is true with more Help to Buy purchases of flats, not houses.
The graphics also show how much regional Help to Buy prices were last year, ranging from £192,565 in the north-east to £450,585 in London.
You can also see the proportions of Help to Buy in terms of the total number of new-build sales per region, peaking at 55.4% last year in the east midlands.
As at the end of last year, the scheme had supported around 211,000 property purchases through loans totalling £11.7bn.
That last figure is expected to almost double – to £22bn of taxpayers’ money – by the time the current scheme comes to an end in March 2021.
By March 2023, thanks to a new scheme running from April 2021, Homes England expects to have loaned around £29bn, supporting 462,000 property purchases.
The graphics are here – hover over them for local information:
https://www.nao.org.uk/other/the-help-to-buy-equity-loan-scheme-data-visualisation/
Comments (5)
Am I the only one who sees this scheme as a tool that builders have used to inflate their prices? When a HTB property is being valued for the first time on the secondhand market how many agents are finding the initial sale price unreasonable? So far in my area we haven’t sold ONE on the secondhand market using this scheme. But developers are selling huge amounts of new homes at inflated prices using it. I do hope someone in government has their eye on the ball for when they all start to come on the market secondhand. Need to be able to pass on the same HTB loan to the new buyers on the same scheme as new homes. London is set for the biggest problem.
Completely agree. And the proof for me was selling a starter home second-hand for the daughter of a friend, for about 10% less than she purchased it for three years previously. When the HTB surveyor assessed it to report back to the Government department responsible for managing these deposits, I queried whether it would be ok that this was the case – “oh yes, they’re all selling for less second hand”.
Now, I have no problem with helping youngster into the market. But allowing the developers to line their own pockets for 10% or more than the market value, and subsiding their affordability with no-one holding responsibility for the loss, is insane. This house lost about £25,000. Multiply that by the figures above and the numbers are eye watering.
Flatnose1927
Sorry – but the situation you describe is not new and not attributable to HTB.
New-builds carry a premium – always have. 10% above second-hand values would have been considered “giving them away” in the 70’s, 80’s, 90’s and even the early noughties. Often the premium extended to 20%+ – and buyers willingly paid it.
Then – the world changed towards the end of the ’00s. Pretty much since then, that “premium” has disappeared the second the first owner pees in the pot, so as to speak.
We are in a period that no-one working in the industry has seen before, where current house values are – in some areas at least – still less than they were 12+ years ago. Previously, you couldn’t say that about a period of more than seven years. And that goes for both the new and second-hand markets – which are inexorably entwined.
But back to new homes – or at least to your friend’s daughter’s.
Had she bought and driven virtually any half-decent car new off the forecourt in 2016, she would quite readily accept that it had lost £25k of its’ value compared to its’ “new” price. Dropping 10% on any purchase price when you sell something you bought ‘new’ – bought second-hand, even – is a given in ANY other type of sale, unless you count gold-pressed Latinum bars – but that’s only a Gene Roddenberry creation so maybe the old adage that you’ll never lose with bricks and mortar needs to be forgotten and homeowners and homeseekers alike need to see property for what it is – a roof to live under, rather than an investment.
Has totally distorted the market. A political tool that has allowed government to claim they are hitting their targets for new build. The reality is often that instead of being helped to buy those using this scheme are being helped into negative equity. The building companies are enjoying a bonanza which will, at some point come to a juddering halt.
WiltsAgent
The “new homes” of today are the “second hand sales” of tomorrow.
“The reality is often that instead of being helped to buy those using this scheme are being helped into negative equity.”
Only an issue if they sell for less than they bought for, surely?
Here’s a novel idea – they could stay where they are until they can afford to move.
Worked for me – and countless 0000000s of others over the years…