Since the launch of the Help to Buy equity loan and mortgage guarantee schemes:
- 80% of scheme completions have been made by first-time buyers, with more expected when the government’s Help to Buy ISA launches this autumn
- the average house price was £184,000, significantly below the national average
- almost 94,000 people have bought a home through the scheme
- 95% of Help to Buy completions took place outside of London
- over half of Help to Buy completions have been for new-build homes
Help to Buy: equity loan and Help to Buy: mortgage guarantee were launched in 2013 to support hard-working taxpayers who could pay a mortgage, but couldn’t afford the high deposits demanded by lenders in the wake of the financial crisis.
Together with the government’s Help to Buy: NewBuy scheme – which offered 95% mortgages for those buying new-build properties - the number of new home owners has reached almost 100,000 (99,601).
The scheme also continues to benefit first-time buyers overwhelmingly, with the vast majority of sales outside of London and at prices well below the national average.
Help to Buy is also ensuring the long-term health of the housing market by increasing housing supply, stimulating home building. Over half of the homes bought through Help to Buy are new-build properties, helping to contribute to the 41% rise in private house building in England since the launch of Help to Buy.
As today’s statistics show, Help to Buy (mortgage guarantee and equity loan) is helping people who need it most, with over seventy thousand households having bought their first home thanks to the scheme.
This is 80% of overall Help to Buy buyers, demonstrating that the scheme is successfully targeting those who need help getting on the housing ladder, despite only accounting for a small proportion of the mortgage market (3% for both mortgage guarantee and equity loan).
First time buyers will have a further boost from the Help to Buy ISA, which the Chancellor announced in the March Budget. Under this scheme, first time buyers can save up to £200 a month towards their first home and the government will boost their savings by 25%, or £50 for every £200, up to a £3,000 bonus.
Helping people across the UK
Help to Buy is helping people throughout the UK achieve their dream of owning a new or bigger home.
With almost all completions outside London, the highest number of homes have been through the mortgage guarantee scheme in the North West region. The equity loan – a scheme for new build properties – is particularly high in the South East region.
Figures for the mortgage guarantee scheme also show completions have been least concentrated in regions where house price growth is highest. In London the scheme makes up just 1% of all mortgage lending compared to an average of 3% across the country.
Getting Britain building
Help to Buy is also supporting the country’s economy by getting Britain building again. Over half of homes bought under the scheme were new-build properties, contributing to the sharpest rise in house building orders since 2010.
Last year private housing starts in England increased by 8,660 with annual housing starts at a seven year high and 443,410 new private homes being built in the UK since April 2010.
The Treasury has also confirmed that it is providing the Homes & Communities Agency with the 2016/17 allocation of the £6 billion committed to extend Help to Buy to at least 2020, giving developers certainty so they can plan for future Help to Buy housing schemes.
Help to Buy was designed to support responsible lending, and the Bank of England made it clear last October that the scheme is “not a material driver of house price growth.”
This is demonstrated by today’s figures: the average house price for both parts of the scheme, at £184,000 (£156,000 for the mortgage guarantee and £213,000 for the equity loan scheme), remains significantly below the national average house price of £273,000.
The average house price to income multiple under the mortgage guarantee scheme is just over 3.5x salary, and capped at a 4.5x ratio to ensure responsible lending.
Chancellor of the Exchequer George Osborne said:
The government’s Help to Buy scheme has now helped nearly 100,000 working people across the UK achieve their aspiration of buying a new or bigger home.
And I’m looking forward to these numbers growing even more with the launch of the new Help to Buy ISA this autumn, which will ensure that first time buyers saving for a deposit get an additional boost from the government.
Key to our long term plan is providing economic security for working people, at every stage in life. The security of owning your own home is a big part of this, which is where Help to Buy comes in. It’s also boosting the economy more widely by driving an increase in house building in Britain, ensuring long-term housing supply and creating jobs.
That’s why I committed £6 billion to extend Help to Buy to at least 2020, giving developers certainty so they can plan for future Help to Buy housing schemes and continue to boost housing supply. Today I’ve confirmed the first annual allocation of nearly £1.5 billion, providing funding for Help to Buy equity loan for 2016/17.
Housing Minister Brandon Lewis said:
Anyone who works hard and aspires to own their own home should have the opportunity to turn their dream into a reality.
Today’s figures show how the government’s Help to Buy scheme is turning those dreams into reality, with nearly 100,000 people helped to own a home of their own, each needing just a 5% deposit.
And with the Equity Loan scheme extended to 2020, even more people will be able to follow in their footsteps.
Stewart Baseley, executive chairman of the Home Builders Federation said:
Help to Buy Equity Loan has stimulated demand for new homes and led to a sharp rise in private house building. Extending the scheme to 2020 provides certainty of demand that allows home builders to recruit the people and invest in the land and supply chains required to support further sustained increases. Building more high quality homes has made home ownership attainable for many more first time buyers, whilst providing improved infrastructure for existing communities and boosting local economies.
The Mortgage Guarantee scheme has also benefitted new home building, both directly by increasing demand for new homes, and indirectly by helping new home buyers to build housing chains.