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1 in 3 new home buyers use Help to Buy

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A third of new build homes outside of London are bought with the aid of the Help to Buy scheme, according to new analysis.

Figures from the BBC show that the Help to Buy equity loan has played a key role in enabling many young couples and families to take their first steps onto the property ladder and others to move up it.

Equity loans are available to both first-time buyers and home movers on new-build homes in England, up to a value of £600,000, and require a contribution of at least 5% of the property price as a deposit.

The government then provides a loan of up to 20% of the price of the property, with the buyer needing a mortgage of up to 75% to cover the remainder of the cost.

Nationwide take-up

BBC England’s data unit shows that Help to Buy loans were used to purchase 76,559 homes outside of London between April 2013 and April 2016, which is equivalent to 30% of the 255,960 privately built new properties completed in that period. When all households across the UK are taken into account, one in 200 homes now have a Help to Buy loan.

After the initial contribution, buyers are not charged loan fees for the first five years of owning the home, with the first instalment of interest added in the sixth year, when a fee of 1.75% of the loan’s value is added. After this, the fee increases every year, with the rise calculated using the Retail Prices Index, plus 1%.

Homeowners are required to pay back the loan after 25 years or when they sell your home, depending on which comes earliest, with the amount paid back depending on the market value at the time. Homeowners are able to pay back part or all of the loan at any time, with the minimum percentage able to be paid back being 10% of the market value of the property.

FTB help

Overall, 100,264 equity loans have been taken out at a total value £4.6 billion, with the average loan being £46,301. The total value of properties sold comes to £17.7 billion, with an average purchase price of £229,608.

The scheme has had a significant effect on helping first-timer buyers to get on the housing ladder, with 81% of people taking out Help to Buy equity loans being FTBs.

Rob Slocombe, Group Production Director at Avant Homes, said: “Help to Buy has played a significant role in enabling people to purchase a new home, but first-time buyers in particular. Many young people have aspirations of owning their own home, and having this financial assistance in place has made their dreams a reality.

“Many of our customers have purchased a new home with the assistance of Help to Buy, so we have seen at first-hand how successful the scheme has been in realising their ambitions.”

The figures also correlate with recent data compiled in the Halifax First-Time Buyer Review, which revealed that the number of FTBs in the UK is estimated to have risen by seven per cent in 2016 to a total of 335,750.

This is the highest level since 2007, when the total stood at 359,900, with the Help to Buy scheme and record-breaking mortgage deals credited as factors in getting people on the property ladder, and the figure set to increase further in 2017 and beyond.

Use our mortgage calculator, created with the Mortgage Advice Bureau, to work out the best deal for you.