The government’s Help to Buy scheme could be set to end after 2021, but is has been hailed an “unmitigated success” by builders and has helped many first-timers onto the property ladder.
According to a new report produced by the Home Builders Federation (HBF), 48,000 homes in 2017 were sold through the Help to Buy scheme with an estimated 150,000 jobs being safeguarded as a result.
The latest HBF report says that the government scheme has not only increased job opportunities, but improved the volume of new-build sales against a sluggish second-hand property market and aided developers’ sales and profits generating additional revenue for the UK economy.
Help to Buy currently offers a government-backed loan of 20% in addition to the 5% buyer’s deposit when buying a new-build home. The HBF’s report comes in the wake of rumours from government officials that the scheme, which is scheduled to finish in 2021, may not be extended.
Four out of five new-build sales are through Help to Buy
Housebuilders and developers have been staunch supporters of the Help to Buy scheme since it began in 2013. Over the past five years including up until the end of March, a recorded 136,657 new-build homes have been bought by first-time buyers benefiting from the Help to Buy equity loan scheme.
The HBF report claimed that: “Up until the end of March of this year, these figures indicate that four out of five new-build sale completions resulted from Help to Buy funding.”
Affordable homes still a priority
Every year, it is estimated that around 20,000 additional affordable homes are being built as a result of the increase in first-time buyers being able to access the government scheme. In turn, this is producing in the region of a further £1bn in tax revenue, and education is receiving £73m through the agreement Section 106 that supports local community infrastructure. This, according to the HBF report, equates to the provision of 34,000 classroom spaces.
Claims that Help to Buy is benefiting higher income buyers were rejected by the HBF, which argues that contrary to figures produced in August indicating that some 10% of buyers were earning over £80,000 per annum, the majority of those taking up the scheme in 2017 were first-time buyers with a median annual salary of £49,000.
Long-term investment potential of new-builds
The HBF report recognised that not only were buyers enjoying larger properties as there are more houses being constructed than flats, but also that new-builds have always held their value well and outperformed existing properties. Prior to 2017 over a period of 10 years, while second-hand property values went up by 23%, new-build property gained 26%. From 2013 when Help to Buy started, new-build prices have increased by an average of 38% compared to 35% for existing properties.
Stewart Baseley, executive chairman of the HBF, said: “It is quite clear that the Help to Buy scheme has been an unmitigated success and has delivered handsomely on all its objectives.
“It has enabled hundreds of thousands of people to realise their dream of owning a home, the vast majority of whom are first-time buyers on average incomes. It has led to an unprecedented increase in house building activity, created tens of thousands of jobs and boosted local economies the length and breadth of the country.”
He added: “Certainty moving forward is now required to enable the increases in housing supply, and the associated social and economic benefits, to continue.”
