But recent research suggests the scheme is often used by families to upsize to their next property and is mainly benefitting those with sizeable incomes.
There is nothing in the scheme that limits it to first time buyers, and of the 420,000 people who have used it since its introduction in 2014, only 365,000 of them were buying their first home.
Benefiting those who don’t need it?
The Help to Buy Scheme was introduced to help those who would not otherwise be able to get on the ladder.
With the average wage of those using the scheme at £55,000 in the UK and £72,000 in London, there are arguments that it does not benefit those who need it. With the scheme having paid out £8.3 billion over the last five years, should this really continue if it’s being used by those it wasn’t intended for?
Perhaps this indicates that ‘second steppers’ require more support too and the government should consider this.
Is it really helping first time buyers onto the ladder?
Whilst we can see that first time buyers are getting on the property ladder using Help to Buy schemes, it’s unclear whether those people would have bought a home anyway. If they were intending to buy ‘traditionally’, (a pre-owned home) the new build scheme has essentially stolen away a buyer to a different market. One that benefits developers, rather than generating movement in a housing market that needs it.
How does Help to Buy affect the property market?
As mentioned, if first time buyers choose new builds over existing properties, that holds up sellers who want to move on. That’s a lack of money moving around in the market.
Secondly, and more problematically, new build properties tend to be more expensive than existing homes. This means that with inflated purchase prices, when first time buyers go to sell, they may get less than they expected.
What do the experts say?
Sam Dumitriu at the Adam Smith Institute suggests that Help to Buy doesn’t cover the main issues in the housing market, mainly a short supply of homes. Labour Shadow Housing Minister John Healey says the scheme should focus on supporting buyers with ‘ordinary’ incomes.
What does reallymoving say?
Our data tells us that new builds are 14% more expensive than existing properties, and for first time buyers, they are 36% more expensive. First time buyers who use Help to Buy Schemes pay 8% more for their property than those buying new builds without using the schemes.
The Help to Buy Equity Loan was designed to bridge the gap between a small deposit and what a mortgage would cover. With the increase in property prices, to buy without these schemes means you need a large deposit. This would take a very long time for some first time buyers to save up.
Whether the Help to Buy Scheme carries on beyond its official ending date in 2021, it’s clear that we need more homes in the UK, and first time buyers need support in getting on the ladder.