FTB’s account for 81% of Help to Buy purchases

First-time buyers accounted for 81% of the total home purchases through the Help to Buy: Equity Loan scheme in the period between it’s launch in April 2013 and ending September 2019, according to new Government figures.

The Ministry of Housing, Communities and Local Government revealed that during this period, 248,075 properties were bought with an equity loan, with 201,784 of those made by first-time buyers.

The latest data revealed the total value of the equity loans during this period reached £14.31bn – with the value of the properties sold under the scheme totalling £65.69bn.

The Government figures also showed the mean purchase price of a property bought under the scheme was £264,785, with buyers using a mean equity loan of £57,694.

In London, the maximum equity loan was increased from 20% to 40% in February 2016, and the Government data showed that since then to September 2019, there were 17,287 completions in London – of which 15,085 were made with an equity loan higher than 20%.

“Buyers should understand exactly what’s involved before considering the loan scheme,” commented Hargreaves Lansdown personal finance analyst, Sarah Coles. “You have to buy a new-build, which comes with a major premium.

“You may also be persuaded to stretch yourself further to buy a bigger and more expensive home – the average first-time buyer property bought through the scheme costs more than the average UK property and a quarter of first-time buyers using the scheme end up buying a detached house. Then, after five years, you need to remortgage or pay fees on the Government portion of the loan.

“One in 20 people have fallen into arrears in the scheme, and even those who keep up repayments can run into trouble when they try to remortgage, if the value of the property has fallen.”

The Government has confirmed the current Help to Buy: Equity Loan scheme is ending in March 2021 to be replaced by a new scheme running from April 2021 until March 2023 – however, this will only be open to first-time buyers, and will include regional property price caps.

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