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Help to Sell?

Help to Sell?

10.10.19

A recent study has found that first time buyers in England investing in a new home using the Government’s Help to Buy Equity Loan scheme are paying on average 10% more than those buying new homes without it.

According to data collected from 41,500 First Time Buyers the reallymoving website for home move services over the last year, those purchasing a new build home with Help to Buy in England paid on average £303,450 in the 12 months to September 2019.

To account for regional variations the figures are calculated at postcode area and show that the premium paid by those using Help to Buy Equity loans was 10.3%.

Buyers in the North and parts of the Midlands have paid the highest premiums, with first time buyers using the scheme in Yorkshire, the West Midlands and the North West paying approximately a fifth more at 21.6%, 21.5% and 19.9% respectively, than those buying new homes independently.

The current Help to Buy Equity Loan Scheme will be replaced by a new version launching in April 2021 that will be restricted to First Time Buyers only (currently the scheme is available to all buyers that meet the criteria) and for properties with a market value up to new regional price caps. It will then run for two further years before ending in March 2023.

Although the scheme is highly attractive to those struggling to raise a deposit and the required mortgage, which enables them to buy a home with just a 5% deposit which is topped up with a government loan of 20% (40% in London), which is interest-free for the first five years. Developers are taking advantage of the scheme and charging more for homes with Help to Buy available. Chief executive officer of reallymoving, Rob Houghton comments ‘Help to Buy might be better named Help to Sell, since our research shows that despite the scheme’s popularity with buyers, house builders are the ones reaping the benefits,’ Houghton continues, ‘Most first time buyers 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 Equity Loan.

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