The Government scheme was launched in April 2013 and provides a 20% loan towards the deposit which is interest-free for five years. It was due to end in 2021.
However, as part of this week’s Budget it was announced the scheme would be extended for an additional two years to allow more first-time buyers to benefit.
So far Help to Buy has enabled thousands of first-time buyers realise their dream of homeownership. Indeed, UK Finance, the trade body for the mortgage and banking industry, said schemes such as this had helped boost first-time buyer figures to their highest level in a decade.
Mixed success
But it has not been without its critics, either. Daniel Hegarty, CEO and founder of leading digital mortgage broker, Habito, said although originally tipped as a ‘solve-all’ scheme to fix the housing crisis, it’s actually been a mixed success at best.
He explained: “Despite the scheme helping many would be homeowners get on the ladder and contributing to the building of more new homes, those using Help to Buy have been found to be paying almost 10% more on average for their homes than those who don’t.”
However, he said the fact it had been extended for first-time buyers only meant it would have a greater impact for those who really needed help.
He added: “The scheme hasn’t quite worked as intended with over a third of households using it found to be earning over £50,000 and data showing it has been used by movers to upsize.
“The new restrictions making it for first-time buyers only with regional price caps should provide a more targeted benefit to those who need it most.”
Meanwhile Gemma Harle, managing director of Intrinsic mortgage network, said some would see the extension of the scheme as a positive but others would be unhappy it had not been scrapped.
She added: “The scheme has had mixed reviews with some accusing it of simply serving to massively inflate housebuilder share prices alongside the unintended consequence that some first-time buyers have been left as mortgage prisoners.”
Support for future homeowners
Those who welcomed the extension, however, said it would not only support first-time buyers but also provide more certainty for housebuilders, developers and buyers which would enable them to plan more effectively for the future.
Craig McKinlay, new business director at Kensington Mortgages, said: “It isn’t the only solution to solving the housing crisis, but it has supported many people on the path to homeownership.
“A guarantee of its extension to 2023 is much needed news for both developers and buyers to help with their long-term plans.”
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