End of Help to Buy

There's no doubt new build firms will be sweating about demand falling in their properties. We've seen the values artificially inflated so I would expect the price of new builds to come down. With many lenders also wanted a higher deposit for new build properties the competition on rates will also reduce which cannot be good for buyers. Let's hope we get some meaningful discussion in the autumn statement and we see some new schemes come to the market.

We are already seeing older clients exploring how they can help through releasing equity and gifting an early inheritance to children or grandchildren who will struggle to buy their first properties without help. We are having lots of discussions about achieving a balance which ensures the clients retain enough equity for their own needs and ensuring that all other options are considered first.

With help to buy ending it's like turning a tap off of huge demand of allowing first-time buyers to get on the housing ladder. With no plans to replace the scheme and the way rates are moving there is a high chance buyers will overlook new-build properties as they typically come with a premium price attached to them. Shared ownership just doesn't have the same attraction or appeal to many buyers and we can't see this being enough to prop the new build industry up. The one saving grace though for new builds is with the price cap uncertainty post-April 2023, energy efficiency may well play a factor in the type of property people start to buy.

Help to Buy was designed to support house builders and prop up house prices by ensuring a continuous stream of first-time buyers for overpriced new build properties. It was never about helping first-time buyers, who've largely been treated with contempt. The only reason we have schemes like shared ownership, help to buy and the mortgage guarantee scheme is because property prices have become dislocated from average earnings. In other words, people's ability to pay. What first time buyers actually need are lower house prices, which by accident rather than design, they will soon get. Unfortunately, because of the sudden ramping up of mortgage rates, some owners of help to buy properties will be repossessed. Trapped in negative equity, they'll be unable to afford to sell up or to make the mortgage payments when they come to remortgage.

Oh no! How will the developers flog over priced low quality new builds now!? Let's be honest, nobody has benefited more from the help to buy equity loan scheme than developers. There's a place for shared equity, but it's actually being addressed on the open market now with private equity loan providers more than plugging the gap. I think this will make people think twice if using an equity loan is really a good idea once the Government stop pedaling the idea. I've seen people use equity loans who really shouldn't have. With more lenders than ever before now allowing 10% and 5% deposits on new builds, where as many typically insisted on 15%, this has opened up new builds to a lot more people and will replace some of the need for equity loans as the deposit needed has been cut by two thirds for some people. This doesn't effect the income limitations, but maybe it's not such a bad thing that help to buy ending will deter people from buying a home they can't truly afford, that's never led to any negitive consequences before has it?

Shared ownership has been around for quite sometime, pre-dating Help-To-Buy, and has never really caught the homebuying publics imagination, I guess because they don't actually own all the house and are still paying rent too. Whilst there is a need for something to help first-time buyers, I'm not sure it only applying to new builds is the answer, as all that seems to do is allow builders to charge more for starter homes - putting the benefit of government schemes into the developers pockets, rather than helping first-time byers.