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‘Help to Buy premium’ rises to 12% as number of first time buyers grows

  1. 05 April 2019
  2. By Andi Michael

First time buyers using the government’s Help to Buy Equity Loan scheme paid 12% more in February 2019 than those buying new homes without the scheme.
 

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By comparing data from over 44,000 first time buyers using our site to get quotes for moving home services over the last year, we saw that those using Help to Buy paid an average of £303,000 in February, compared to £270,000 paid by those buying a regular new build house without a scheme.

With the Help to Buy Equity Loan Scheme appearing like a lifeline to first time buyers struggling to save a deposit, it’s important to consider why first time buyers might be paying more. It’s possible that as buyers have greater spending power using the scheme, they buy a bigger or more expensive property, just because they can. Alternatively, strong demand for the scheme (and a cut off date of 2023) may be encouraging developers to charge higher prices.

This so-called ‘Help to Buy premium’ has risen sharply since last autumn, with 8% in October increasing to 12% in January and February 2019.

With first time buyers at the highest level recorded, we found on our site that in January and February FTBs accounted for 57% of homebuyer activity, and that one in five were choosing a new build home.

Our CEO, Rob Houghton says:

‘Help to Buy is indeed helping first time buyers get onto the housing ladder, but these figures suggest that they may be paying a premium in order to get the help they need to raise a deposit. This could be either because developers are charging a premium or because first time buyers are encouraged to buy a more expensive property because the scheme gives them greater spending power.’
 
For more information on how we collected our data, have a look at our press release. For more information about the Help to Buy Equity Loan Scheme you can check out our first time buyer’s hub.
 
 

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