Some housebuilders sell nearly half their properties with the support of Help to Buy, however it seems that the scheme remains poorly understood, with nearly half the UK population harbouring misconceptions about it.
In fact, nearly half of Brits are blissfully unaware of the many schemes aimed at helping first-time buyers get onto the property ladder. Almost half of adults in the UK (47%) are unaware that there are schemes to help first-time buyers get onto the housing ladder, according to new research from online mortgage broker Trussle.
The national study surveyed 2,001 people across the UK and found that there’s widespread confusion over the Help to Buy ISA, Help to Buy Equity Loan and Shared Ownership schemes.
While 53% of people were aware of the homeownership schemes available, 47% were completely unable to identify them. In fact, just one-in-five people across the UK were able to correctly name at least one of the three main schemes.
Overall, nearly two-thirds (58%) of people believe home ownership schemes are too complicated to understand and among 18-34-year olds, this figure rises to 64%. Worryingly, just 8% of people thought that the schemes were easy to understand.
Of course, Help to Buy was always meant to be a sticking plaster solution while the dust settled from the financial crisis in 2008. A victim of its own success, it will be axed in 2023 after courting controversy for inflating house prices. Nonetheless, it is also credited with boosting supply by 14%.
According to Trussle’s survey, only 48% of the UK population know that a 5% cash deposit is required, and crucially, fewer than a third (28%) are aware that properties can cost as much as £600,000 in London, to reflect the capital’s higher property prices. Given that the scheme is most popular in London, this simple misconception could cost housebuilders a critical portion of the market.
Of course, with lower house prices and a plethora of competitive mortgages, First Time Buyers aren’t as reliant on government schemes as they once were. However, an earlier survey by Satander revealed that First Time Buyers are also woefully misinformed on mortgages, suggesting property newbies need far more help than they are currently receiving.
Ishaan Malhi, CEO and founder of Trussle commented: “This research uncovers the scale of misunderstanding around the existing housing schemes designed to help first-time buyers onto the property ladder. Significant numbers of people feel locked out of homeownership and this lack of awareness around their options is simply making things worse.
“The truth is that the complexities around homeownership, including mortgages, present a wider industry problem around clarity.”
The Help to Buy ISA, which closes this week, is only available to first-time buyers – but just two in five (43%) are aware of this, and only 17% know that you can qualify from 16 years old. This represents an enormous missed opportunity, as research by GetAgent.co.uk suggests that buyers who have taken advantage of the scheme since it launched in 2015 should now have the cash to buy a house in 71.5% of UK.
For the Shared Ownership scheme, household income must be less than £90,000 within London and £80,000 outside of London. And yet, 68% of people think their household income must be less than £60,000 a year to qualify, regardless of location.
As political manifestos brag about introducing more homeownership schemes, it seems that simplifying existing ones and better promoting them could have the desired effect.
“If these schemes were simplified, prospective buyers would be more likely to understand the options available to them, more quickly,” Malhi said. “We want all first-time buyers to feel properly supported on their home ownership journey and maintain any momentum in today’s already tough market.”
