The Growth Series

What does the end of Help to Buy mean for First Time Buyers?

When the Help to Buy scheme was introduced in 2013, it allowed all households to purchase a new-build home with a deposit of just five per cent. 

But last year, the scheme was restricted to first-time buyers, with price caps based on 1.5 times the average regional first-time buyer price, ranging from £186,100 in north-east England to £600,000 in London. Furthermore, the scheme is now set to end in March 2023.


So what impact have these changes had on people’s purchasing decisions?

According to official figures, Help to Buy sales more than halved across the country between October and December 2021 year-on-year, with just 8,913 completions. 

There are many factors that could explain this decline, beyond it being restricted to first-time buyers. For example, there has been a shortage of properties in development in certain areas, pandemic related construction delays and rising house prices impacting on the number of properties falling within the price caps.

As the Help to Buy scheme winds down, it’s likely these factors will continue to hit sales in the coming months. However, the end of Help to Buy could prompt prospective house buyers to look at some of the alternative schemes that are currently available.

At the same time, it could be a great opportunity for you to also make sure you’re aware of these options, so you can advise clients accordingly, add genuine value to their client experience and help them achieve their goals. Among the current raft of schemes available are:


Shared Ownership

This option allows buyers to purchase a share between 10 and 75 per cent of the home’s full market value and pay rent to the landlord on the rest, along with monthly ground rent and service charges. The Shared Ownership scheme has existed for more than 40 years, so it’s a well-established option that many brokers will already be familiar with. Read here for more information.


Deposit Unlock 

Devised in collaboration with lenders and the housebuilding industry, this scheme allows first-time buyers and current homeowners to purchase a new-build property with a five per cent deposit. This is possible because the developer pays for insurance to reduce the lender’s exposure to risk. Read more here


First Homes scheme

This new government scheme allows first-time buyers in England to purchase a home for 30 to 50 per cent less than its market value. This can be a property bought from someone else who originally bought it as part of the scheme or a new home built by a developer. The scheme is currently in its second phase, which runs from 2021 to 2023 and is expected to deliver 1,500 homes during this time. Find more information on the scheme, click here.


Mortgage Guarantee Scheme 

Launched in April 2021, this government-backed mortgage scheme helps first-time buyers and current homeowners secure a mortgage with a deposit of just five per cent to buy a house of up to £600,000. This scheme comes to an end on December 31st. Get more information here.

According to Savills, Help to Buy and Shared Ownership have supported an average of 72,000 new homes sales every year. However, the organisation believes the alternative options we’ve discussed may fail to match this figure.

Indeed, Savills states that if these alternative schemes “fulfil their potential”, they could support the delivery of 50,000 homes a year, while private sector schemes such as Wayhome and Market Mortgage could also contribute. Furthermore, estimates based on Bank of England data suggest that a further 5,000 buyers - people with at least a ten per cent deposit and a loan-to-income ratio of no more than 4.5 at most - will be able to purchase unassisted.

That leaves the market with a shortfall of roughly 17,000 homes a year.


Where is the end of HTB having the biggest impact?

Although it’s true that Help to Buy sales have fallen considerably over the last year, a deeper look at the data throws up some interesting findings.

An analysis of the data by Housing Today revealed that between Q3 2019 and Q3 2021, there were big falls in Help to Buy activity in north-west and north-east England during this period. In fact, there was a 67 per cent decline in Help to Buy sales in the north-west in 2021, when compared with 2019.

Similarly, the north-east, West Midlands and Yorkshire & the Humber saw decreases of 57 per cent, 56 per cent and 52 per cent respectively. But while activity is also down in the south, it is notably less severe, with sales falling by 30 per cent in the south-west and 34 per cent in London - well below the national headline figure.


Why is this happening?

According to the Home Builders Federation (HBF), the biggest declines have been in the places where Help to Buy was particularly popular, such as Manchester, Newcastle and Cheshire, which it says isn’t a surprise.

As a result, the HBF believes making sure first-time buyers in particular can still access high loan-to-value mortgage products will be “essential if housing supply levels are to be maintained”.

However, we should stress that while many people use Help to Buy to solve deposit and affordability challenges, high loan-to-value mortgages only address deposit issues. 

Furthermore, the number of higher loan-to-value mortgages completed each year has remained very low compared to before the global financial crisis. In fact, Savills reports that the number of loans completed at more than 75 per cent loan-to-value was still 50 per cent lower in 2019 than it was in 2007.

A total of 54 per cent of those who have taken advantage of Help to Buy since its inception have used only a five per cent deposit to purchase their house, while a further 24 per cent used a deposit of up to ten per cent.

As Savills notes, about two-thirds of these people would have struggled to buy the same house without a scheme such as Help to Buy helping them “overcome the deposit barrier”.

So whether the shortfall left by the end of Help to Buy can be fully made up by alternative property purchase schemes remains to be seen, but one thing is certain - brokers will be at the front line of helping first-time buyers overcome the many affordability and home buying challenges they face in the coming months.

You’ll be crucial in helping them explore the alternative options that are open to them and using your expertise to point them in the right direction.

New call-to-action

Get notified of new content

Related Content


Latest Blogs

Homeowners Improving Not Moving

Homeowners Improving Not Moving

Added 04/08/22 - 3 min read

Mental Health Strategies for Brokers

Mental Health Strategies for Brokers

Added 21/07/22 - 4 min read

Why Choose a Broker?

Why Choose a Broker?

Added 18/07/22 - 2 min read