In the eyes of many industry commentators and members of the opposition, the Help to Buy scheme sits somewhere between being the Governments greatest achievement within the housing market, and a potential reason why many house builders and the new build sector could crumble like a house of cards in the future.
I’m focusing on the more dramatic end of the opinion spectrum here and with the end of the scheme inching ever closer, I expect it to generate even more views and headlines before it is gradually phased out.
The latest figures from the Ministry of Housing, Communities and Local Government showed that:
- Over the period since the launch of the Help to Buy: Equity Loan scheme (1 April 2013 to 31 December 2018), 210,964 properties were bought with an equity loan.
- The total value of these equity loans was £11.71 billion, with the value of the properties sold under the scheme totalling £54.48 billion.
- Most of the home purchases in the Help to Buy: Equity Loan scheme were made by first-time buyers, accounting for 171,053 (81 per cent) of total purchases.
- The mean purchase price of a property bought under the scheme was £258,223, with buyers using a mean equity loan of £55,498.
These figures highlight how invaluable this initiative has been for many home buyers since its introduction, and how the take-up is unlikely to slow-down anytime soon.
Help to Buy has benefited from an increased profile in recent times and this has helped more FTBs recognise its attributes – which is a good thing – although it’s prudent to point out that it should not be considered an all in-compassing solution. And, on the flip side, despite this rise in lending prominence there are still pockets within the market where it can prove valuable for a certain type of borrower which often goes overlooked.
I believe this type of product is seen by most borrowers, as being one which sits squarely in the domain of mainstream or high-street lenders. Meaning the role of specialist lenders can often go ignored, which is a shame. There are specialist lenders who can provide Help to Buy solutions for borrowers with an adverse credit history, IVA’s or even bankruptcy issues, and this is an important part of the scheme which we tend to hear very little noise around (T&Cs obviously apply!).
The specialists might not be applicable for everyone, and still form a small proportion of the overall lending figures, but they should be playing a bigger role in supporting more credit impaired borrowers get a foot on the property ladder for the first time or even back onto it after falling off.