In the final two months of the Government’s Help to Buy scheme (1st April to 31st May 2023), there were 106 properties purchased with a Help to Buy: Equity Loan, using a total value of £11m in equity loans and supporting the purchase of £35m worth of property.
The total number of completions during the period were down by 99% compared to the same quarter of the previous year.
This figure brings the total number of properties purchased using Help to Buy, starting from 1 April 2013 and ending in 31 May 2023, to 387,195.
Of these, it is estimated that 328,346 were purchased by first-time buyers.
The total value of these equity loans was found to be £24.7bn and the total value of the properties sold under the scheme totalled over £109.2bn.
Karen Noye, mortgage expert at Quilter, said: “This morning the Government published its final set of statistics related to the often controversial Help to Buy equity loan scheme.
“The scheme, in operation from April 2013 to May 2023, played a dual role in the UK housing market.
“On the positive side, it enabled a significant number of property purchases, with 387,195 properties bought using the scheme, out of which 328,346 were by first-time buyers.
“This is no doubt significant. This demonstrates the scheme’s substantial impact in helping individuals, especially first-time buyers, to enter the housing market.
“The total value of these equity loans was £24.7 billion, contributing to property sales totalling £109.2 billion, highlighting its considerable influence on the housing sector.”
She added: “However, the scheme’s impact was not uniformly positive. Its design, which allowed the government to gain a share of the property’s appreciation, meant that as house prices increased, so did the government’s profit from these loans.
“This aspect became particularly burdensome for homeowners when they reached the end of their five-year interest-free loan period.
“With the interest rate initially set at 1.75% and then increasing annually based on inflation, many homeowners faced escalating costs, adding financial strain to what was initially an assistance program.
“Furthermore, the scheme also had significant implications for house builders. By increasing demand for new-build homes, the scheme effectively lined the pockets of these developers.
“As more buyers were able to access funds to purchase new homes, builders saw an increase in demand, which likely contributed to the rise in house prices.
“This increase in demand, fuelled by government-backed loans, provided a substantial financial boon to the construction industry.
“However, this benefit to builders came with the caveat that it may have contributed to inflating house prices, making the market less accessible in the long run.”
Noye continued: “While the Help to Buy scheme had clear benefits as illustrated by today’s data its long-term impact includes increased financial burdens for homeowners and a potentially inflationary effect on house prices.
“The scheme’s legacy is thus a mix of significant assistance to homebuyers and substantial gains for the Government and house builders, alongside the creation of new financial challenges for homeowners as the scheme phased out.
“The Government may once again announce a housing scheme next week in the Autumn Statement and hopefully they can learn lessons from this more than decade long experiment.”
