Latest figures show that in the period
between 1 April 2013 and 31 December 2018, 210,964 properties were
bought with the help of the Government's Help to Buy Equity Loan
and the value of those loans was £11.71billion.
With a Help to Buy Equity Loan, the Government lends up to 20%
of the cost of a newly built home, the purchaser finds a 5% cash
deposit and a 75% mortgage to make up the rest. In London, the
maximum equity loan was increased from a maximum of 20% to 40% from
A Help to Buy Equity Loan is a Government financial assistance
which allows eligible applicants to purchase homes through a
Government equity mortgage secured on the home. The purchaser
receives a public subsidy in that they are not charged loan fees on
the Help to Buy Equity Loan for the first five years of owning the
The Help to Buy Equity Loan Scheme can be used to purchase new
build properties up to the value of £600,000 with a maximum equity
loan of £120,000 (20%). In Greater London the maximum equity loan
is £240,000 (40%).
171,053 (81%) of the home purchases were made by first-time
buyers using a total of £9.31 billion equity loans.
The average (mean) purchase price of a property bought under the
Scheme was £258,223 with a mean equity loan of £55,498. Only just
over half (57%) of the homes purchased under the Scheme to 31
December 2018 had a purchase price of £250,000 or less.
58% of first-time buyers using the Scheme to purchase a property
had household incomes ranging between £20,000 and £50,000. However,
of the 210,964 cumulative completions to 31 December 2018, 58,124
purchasers (27%) had total household incomes of greater than
Read the full statistical release
The existing Scheme has been criticised in some quarters amid
concerns that it fuels new build house price increases and is
poorly targeted, being open to purchasers on relatively high
incomes. There are also concerns that if we see significant house
price deflation this could lead to a significant increase in
negative equity and defaults on mortgage repayments - particularly
if house price deflation coincides with the end of the purchasers'
5-year interest free equity loan.
The Chancellor's 2018 Budget Statement
contained an announcement that a new Help to Buy Equity Loan Scheme
will replace the existing Scheme and will run for two years from
April 2021 at the end of the current Scheme and the current Scheme
will then close. Unlike the existing Scheme, the new Scheme will be
available for first-time buyers only and for houses with a market
value of up to the new regional property price caps set at 1.5
times the current forecast regional average first-time buyer price.
The caps range from £186,100 in the North East to £600,000 in
ARCH has long argued that any Help to Buy Scheme should be
restricted to first-time buyers on lower incomes who are unable to
access the owner-occupied market and cautiously welcomed the
Chancellor's announcements of changes to the Scheme in the 2018
Budget, but also argued that the Government should at least match
the investment in Help to Buy by investing in the supply of new
social rented housing.