FTBs using Help to Buy pay 10% more for new homes

First-time buyers (FTBs) in England using the Help to Buy scheme are paying 10% more on average than those who are not, according to research by reallymoving.

The data, collected from over 40,000 first-time buyers, found that those purchasing a new build home with Help to Buy in England paid on average £303,450 in the 12 months to September 2019.

Calculated at postcode area level to account for regional variations, the premium paid by those using the scheme was 10.3%.

This comes as Barratt Developments recently revealed that 40% of their customers were using Help to Buy.

The Help to Buy premium is highest in Yorkshire, the West Midlands and the North West at 21.6%, 21.5% and 19.9% respectively.

The premium has remained stable in the capital and stands at 11.8%.

Rob Houghton, chief executive at really moving, said: “Help to Buy might be better named Help to Sell, since our research shows that despite the scheme’s popularity with buyers, housebuilders are the ones reaping the benefits.

“Most FTBs find it difficult to raise a deposit and as a consequence they are being cornered into the new build sector, where homes already command higher prices, before paying an additional premium on top if they need to use a Help to Buy loan.

“In many cases they simply don’t have the deposit required to explore other options such as buying a second-hand home, which may offer considerably better value.

“When buyers come to sell, they could find themselves in negative equity and unable to compete with new developments nearby offering Help to Buy, forcing them to accept a lower price.

“It’s important that those using the scheme consider their exit strategy, including whether or not they can afford the loan repayments on top of their mortgage when the interest free period comes to an end.”

The current Help to Buy scheme will be replaced by a new version launching in April 2021 and closed in March 2023.

Show Comments

Enter your e-mail address to receive updates straight to your inbox