A new government report on the Help to Buy equity loan scheme has revealed that the average applicant earns an average wage of £47,000, fuelling fears that buying a home is now out of reach for many looking to get on the property ladder.
Incomes were highest in London, where the average was £64,900, and lowest in the North East, Yorkshire and the Humber region (£39,000). To compare, the average UK salary is £26,500.
The average price of a property purchased under the Help to Buy equity loan programme to date has been £216,000, going up to £314,210 in London.
The figures will do little to reduce fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
John Healey MP, Labour’s shadow cabinet minister for housing and planning, said: “The number of young people owning their own home has been in freefall since 2010, and housebuilding has remained weak.
“This research confirms that the average Help to Buy applicant earns almost £50,000. Meanwhile home-ownership is increasingly out of reach for young people on low and middle incomes.”
More than 130,000 people have become homeowners since the launch of the Help to Buy equity scheme in 2013. Under the equity loan segment, the government will give you a five-year interest free loan up to 20% on the value of a new-build property. Buyers must pay a deposit of at least 5%.
Most Help to Buy equity loan users have been first-time buyers. In England as a whole some 82% of recipients were first-time buyers, while in London the proportion was higher at 95%
The report also revealed that 82% of buyers taking out an equity loan would not have been able to purchase their home without the scheme.
No evidence was found that the scheme has driven up house prices.
Housing minister Brandon Lewis said: “Anyone who works hard and aspires to own their own home should have the opportunity to do so and this report shows how the government’s Help to Buy scheme continues to turn those dreams into a reality.
“We’ve got the country building again and seen the number of new homes increase by 25% in the last year alone with thousands of people across the country helped by the scheme.”
Healey said: “While it is good news that Help to Buy has provided a modest boost to the housing market, periodic flurries of short-term ministerial announcements do not add up to a serious plan to get to grips with England’s housing costs crisis.
“It will be the next Labour government’s housing priority to reverse this decline, which is why I’ve commissioned the independent Redfern Review to shine a light on the crisis in home-ownership.”
Tougher affordability checks from lenders and rising house prices have made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
The government has introduced a number of new schemes in recent years to help those looking to buy a home, including Help to Buy and Right to Buy. In the Autumn Statement last year, Chancellor George Osborne unveiled plans to build 400,000 homes and announced a 3% rise in stamp duty as part of the government’s aim to curb the buy-to-let sector and free up property for first-time buyers.
The Help to Buy mortgage guarantee scheme provides a government guarantee to lenders on mortgages where a borrower has a deposit of between 5% and 20% for existing properties as well as a new-build.
Help to Buy ISAs, introduced in December, give first-time buyers saving for a deposit the opportunity to put away £200 a month in a dedicated ISA that the government will top up by 25%, up to a maximum of £3,000.
Help to Buy London was launched on 1 February and gives aspiring homeowners who have been frozen out of the market in London the opportunity to get on the housing ladder. First-time buyers with a 5% deposit can borrow up to 40% of the value on a new home priced up to £600,000. They will need a mortgage of 55% to cover the rest.
