Help to Buy equity loan completions in March saw an annual decline of 17% in England according to the latest data by the Ministry of Housing, Communities & Local Government (MHCLG).
Despite the decline in completions seen in March, figures in January and February were similar to the same months a year previously. House purchases completed under the scheme totalled 51,357 in the year to March 2020 which is down 2.1% compared to the year to March 2019. The data shows that the number of first-time buyers who bought properties under the loan scheme in the year to March 2020 was down 3.6% compared to the previous year.
Since the launch of Help to Buy scheme in April 2019, 272,852 properties were brought with the scheme which had a total loan value of £16.05bn. The total value of the properties sold under the scheme totalled £73.28bn.
Most of the house purchases made with the scheme were by first-time buyers who accounted for 82% of total purchases, with the mean equity loan being £58,820. In the capital, the maximum equity loan doubled from 20% to 40% in February 2016 and since then to 31 March 2020, there were 20,233 completions – 17,810 of which were made with an equity loan higher than 20%.
Help to Buy has reportedly mainly supported the purchase of houses. Up to March 2020, the data by MHCLG shows that 18% of all transactions were for flats whilst 82% were for houses. More than half (55%) of all home purchases were made with a deposit of up to 5% of the property purchase price at the point of sale, whilst 23% were made with a deposit ranging between 5% and 10%. The remaining 22% were made by purchasers who paid a deposit of 10% of the property value or more.
Over half (52%) of Help to Buy borrowers had household incomes between £20,000 and £50,000, with only 2% and 5% of applicants having household incomes below £20,000 and above £100,000 respectively according to the figures.
The proportion of houses sold under the scheme on a leasehold basis was on an upward trend until early 2017 but has since declined. The data shows that at the start of the scheme 5.7% of houses were sold on a leasehold basis, but rose and peaked in Q1 2017 at 18.4%. The number has since fallen to 1.2% in Q1 2020.
Andy Sommerville, director of Search Acumen, said: “The latest Help to Buy data reveals the severe impact the early stages of the coronavirus pandemic had on a key driver of activity in the UK’s property market.
“The UK’s lockdown and tight safety measures caused an enforced sharp drop in demand for new properties eligible under the Help to Buy scheme. However, as restrictions start to loosen and government incentives such as raising the Stamp Duty threshold come into play, we are starting to see early signs of an uplift.
“The average property price purchased by first time buyers under the Help to Buy Scheme now stands at £305,414 for Q1 2020, well below the new £500,000 threshold. Any cost savings gained through the Stamp Duty subsidy may be enough to incentivise first time buyers to push ahead with purchases.
“First time buyers are more likely to have been hardest hit by the pandemic, meaning they should be prioritised. Ensuring they are given adequate support will be key to speeding up the property market’s recovery.
“In order for the market to meet any surge in demand, we need to cut delays in the sales process through the adoption of technology and better use of data at the very start of the transaction. This will save headaches for conveyancers, ensure housebuilders get paid faster and that buyers can move in quicker, all contributing to a more resilient property market.”
This post has originally been featured in Property Wire.