The Times request - Help to Buy customers forced to sell at a loss

Flats have become more troublesome to sell over the last few years, what with cladding concerns, increasing service charges, and for many a greater appeal of buying a home with outside space - so the relative reduction in price is problematic in some areas, irrespective of whether Help to Buy was used as the scheme to purchase them. With Help to Buy at least the scheme shoulders some of the responsibility, as the 25% / 40% equity loan value is based on current values, not when the property was purchased, thus taking a hit on the equity, but the general appeal of leasehold flats in many parts of the UK has faltered, especially as mortgage affordability can stretch more borrowers to a house.

There are some flats purchased through help to buy that have massively crashed in price since being purchased for the first time. Northern cities like Manchester, Liverpool, Leeds and Bradford have seen the worst of these as the race to pile them high was on during the naughties. With services charges ramping up, through a plethora of bad managing agents, the task of selling these properties is nigh on impossible.

Flats have long been seen as a problematic property type, often requiring a larger deposit to purchase, due to the slow growth usually seen in their values. In recent years there have been issues with defective cladding on flats and the requirement for certificates, that also complicate the legal side. When coupled with spiralling service charges, flat ownership can quickly become a living nightmare.

The Help to Buy Hangover: Flat Owners Trapped by Falling Valuations, Launched with promise and optimism, the government’s Help to Buy scheme was once hailed as the golden ticket onto the property ladder for thousands of first-time buyers. But over a decade later, a harsh reality is emerging particularly for those who bought leasehold flats in new-build developments. Many are learning that their once-celebrated investments are now financial anchors, the discrepancy between purchase price and current market value being the main sticking point. Help to Buy flats, many sold at a premium when first built, are now being revalued for significantly less sometimes by tens of thousands of pounds. For owners looking to sell or remortgage, this often means they’re stuck. Lenders are unwilling to refinance at the same level, and selling would involve a loss. As these stories continue to surface, the question is no longer whether Help to Buy worked it’s how we support those it left behind.