First Time Buyers are rushing to take advantage of the Help to Buy scheme before the door closes on it forever in 2023. This is especially true in London, where the market is famously cruel to those with shallow pockets.
Samuel Jackson famously said that when a man is tired of London, he is tired of life “for there is in London all that life can afford.” Sadly, very few first time buyers have been able afford that life. However, the Help to Buy scheme has offered a breadcrumb trail towards homeownership in the capital.
In London, home purchases completed under the Help to Buy: Equity Loan scheme totalled 6,149 in the year to 30 June 2019, a jump of 26% on same period last year. First Time Buyers have been especially enthusiastic, snapping up 5,865 properties under the scheme, up by 27% compared with 2018.
The popularity of the scheme in London has skyrocketed since the maximum equity loan was increased from 20% to 40% in February 2016. Three quarters of First Time Buyers now borrow the full 40%.
“Demand has been particularly strong in London with properties bought by first-time buyers using the scheme increasing by more than a quarter compared to last year,” said Andrew Southern, chairman of property developer Southern Grove. “It is notable, however, that 75% of purchases are made using the full 40% equity loan, emphasising the challenge of buying a property in the capital with its high prices.”
Stagnating prices in the capital has given First Time Buyers another leg up onto the London property ladder. Adrian Moloney, Sales Director of OneSavings Bank, said: “The rise in first-time buyers in London is a clear sign that serious buyers who are looking to get their foot in the door are making the most of record low mortgage rates and increased wages, allowing them to capitalise on opportunities within the market.
“However, for the trend to continue, a lot will depend on how the political dust settles in the next couple of months.”
In England, sales completed under the Help to Buy: Equity Loan scheme jumped 6% in the third quarter of this year. Sales totalled 52,268 in the year to 30 June 2019, compared with 49,362 completions in the same period in 2018.
First Time Buyers were even more keen, with 43,285 properties sold under scheme in the year to 30 June 2019, up by 8% compared with the year to June 2018.
Despite staunch criticism, the Help to Buy scheme has shifted 236,313 properties with a total value of £13.46 billion since its launch in 2013. Over 80% of these purchases were made by First Time Buyers. It is also thought to have increased housing supply by some 14%.
“Almost a quarter of a million homes have now been purchased since Help to Buy was launched six years ago,” said Southern. “And the feeding frenzy at the Help to Buy table shows no signs of slowing down, with the value of properties bought using the scheme bounding over the £60bn milestone in the second quarter of 2019.
“However, looming large over the frenetic activity is the March 2021 cut-off, when the scheme is replaced with one which will only be available to first-time buyers and will set regional property price caps.
“This deadline is likely to inject even more urgency into the market. And first-time buyers, unperturbed by Brexit uncertainty, are already showing increased eagerness to make the most of these equity loans while they can, with the number of purchases using Help to Buy growing 8% year-on-year.”
