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Help to Buy loans total £20bn, with a fifth of transactions on flats
Around £20bn in loans have been handed out through the government’s Help to Buy scheme since its launch eight years ago, with nearly a fifth of lending against flats.
Between April 2013 and March 2021, 328,506 properties were bought with the help of an equity loan, the latest official figures showed. Nearly 10% of transactions were in London.
Of the homes bought, 59,641 were flats, representing 18%.
However, amid the cladding scandal, questions have been raised about the value of some of these flats.
Updated Help to Buy figures: £20bn of loans advanced against 328,500 homes valued at £91m. Nothing wrong with the overall LTV. But just short of 60,000 are flats. Good question for MP to ask: How many of these flats are currently worthless, due to defective cladding? pic.twitter.com/UowD7bUtsT
— Peter Bill (@peterproperty) August 14, 2021
Last week, Inside Housing reported that Homes England had changed its policy so that leaseholders who have used Help to Buy in blocks affected by defective cladding will be allowed to sell at a reduced price. Prior to that, the agency had advised that leaseholders could only sell their homes or redeem their Help to Buy loans at unaffected market value.
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Under Help to Buy, unveiled by George Osborne, the chancellor of the exchequer at the time, in the 2013 Budget, leaseholders can borrow up to 20% (40% in London) of the full purchase price of a home from the government. When they come to sell, the borrower must pay back that loan, with the amount owed based on 20% of the market value of the property at the time of sale.
The new figures, published by the Ministry of Housing, Communities and Local Government, showed that 55,649 properties were bought under the scheme in the year to 31 March – an 8% rise on the previous year. This was the highest number of annual completions since the scheme launched, despite the impact of the pandemic.
Between April and June last year, completions were down 61% year on year.
However, transactions bounced back in the first quarter of 2021, with completions up 61% compared with the same period in 2020.
This growth was driven by the North East of England, where completions in the quarter jumped 104% year on year. The North West experienced the lowest growth, as transactions rose 30%.
As the government continues with its push for greater homeownership, Robert Jenrick, the housing secretary, welcomed the figures. He said Help to Buy is “helping young people and first-time buyers feel the sense of pride and achievement that comes with owning your own home”.
Since the scheme’s launch, the total value of properties purchased has been £91.1bn, with an average purchase price of £277,264. Eight in 10 are first-time buyers.
Half of borrowers using Help to Buy had a combined household income between £20,000 and £50,000. Applicants with a household income of £100,000 or more represented 5% of the total.
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