A new report by the HBF illustrates how successful the government’s Help to Buy equity loan scheme has been. The report, released as government considers the scheme’s future, indicates that it has achieved all the targets specified at launch.
The report reveals that:
- 170,000 homes were purchased through the scheme between April 13 and March 18. Of these more than 4 out of 5 were bought by first time buyers;
- In total, it is estimated it has enabled some 246k individuals get on to the housing ladder; Despite claims from critics, the scheme is helping those it was set out to. In 2017 the median household income for those using the scheme was £49,000. There is no evidence to suggest that the market could support high loan to value mortgages should the scheme be withdrawn, with just 3.3% of new lending in Q1 of 2018 at 90% or above;
- Since the scheme launched housing supply has increased by an unprecedented 74%, the fastest increase on record, to supply levels last seen in the 1950s. Planning permissions, a strong indicator of future supply are up 88% over the same period;
- Whilst transactions in the wider housing market remain subdued (down 21.4% on 2006 levels) activity in the new build market continues to rise. New builds now account for almost 15% of mortgaged housing market transactions compared to a long term average of 8.2%;
- The value of the government’s Help to Buy equity loan book has increased significantly – and is still rising. The report estimates that the £8.9bn the government invested over the first five years of the scheme could now be worth £9.8bn, an uplift of 10.5% or as much as £935m;
- The 48,000 homes sold through Help to Buy last year helped sustain an estimated 150k jobs; On an annual basis, the additional house building activity is estimated to provide or fund 20,000 affordable homes; generated £1bn in tax receipts; contributed £73m towards education vis Section 106 taxes – enough to provide up to 34,000 classroom spaces.
- Unlike previous attempts at such schemes, Help to Buy has been accessible to builders large and small, with over 3,000 companies, the vast majority of them small local builders, now registered.
The report also demolishes critics’ oft made claim that the scheme has driven up new build house prices and demonstrates that the respective increase in price between new builds and second-hand homes is remarkably consistent.
Stewart Baseley, executive chairman of the Home Builders Federation 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.
“Government should celebrate its success and use the hard evidence now available to rebut the claims of its critics. As we look to tackle our acute housing crisis and deliver on the Prime Minister’s target to build 300,000 homes per year the scheme has a key part to play. Government should reflect on the huge impact the scheme is having on individuals keen to realise their dreams of home ownership, on housing supply and on the wider economy.
”Housebuilders continue to invest in the land, materials and people needed to deliver furthers increases in supply confident in the demand Help to Buy is underpinning. Certainty moving forward is now required to enable the increases in housing supply, and the associated social and economic benefits, to continue.”