Help to Buy has been broadly positive, say majority of brokers, but it should be restricted to FTBs

The Help to Buy scheme has already been extended once with the equity loan facility being made available to purchasers until 2021. There are some indicators that the Government is already considering extending the scheme beyond the current end date.

United Trust Bank’s most recent broker sentiment poll asked nearly 180 finance brokers if they believed the Help to Buy initiatives have had a positive impact on the UK residential property market.

Yes – Help to Buy has had a largely positive impact 56%
No – Help to Buy has had a largely negative impact 11%
The net result of Help to Buy has been largely neutral 33%

UTB also asked brokers what changes they would like to see made to the scheme criteria if it was extended. The most popular change would be for it to be restricted to First Time Buyers only. According to recent Government figures, over 169,102 properties have been bought using an equity loan since the scheme was launched in 2013 and just over 80% (136,657) were for First Time Buyers.

If the Help to Buy scheme is extended beyond 2021, would you like to see any of the following changes to the criteria?

Position Suggested criteria change %
1 Restrict to FTBs only – no upsizing 41%
2 Restrict to buyers with annual household income <£75k in London and <£60k in the rest of the country 27%
3 Special dispensation available to public sector workers such as NHS / Police / Fire Service / etc 25%
4 Restricted to maximum property values of £400k in London and £250k in the rest of the country 24%
5 Introduce a Help to Buy Capital Gains Tax – Buyers must pay a 10% tax on any increase in value if they sell the home within 5 years 18%
6 Scheme only available on genuine ‘new build’ homes – not conversions or homes created under Permitted Development Rights. 11%

Other suggestions from brokers included extending the scheme beyond just new homes and eliminating the requirement for the Help to Buy Agent to agree which valuer is used on a remortgage and instead just use the lender’s valuation.

Noel Meredith, Executive Director – United Trust Bank, commented:

“We agree with a majority of brokers responding to this poll that the Help to Buy (HtB) initiatives have been broadly positive and we would also be keen to see the scheme extended beyond the current 2021 end date.

“HtB has assisted thousands of people who may otherwise have been unable to get on to the property ladder to buy their own home. It has also provided support to developers, many of them SMEs, by offering their prospective purchasers a tangible financial helping hand and I have no doubt that HtB has boosted activity in the starter homes sector and encouraged house builders to develop more of the homes we need to overcome the UK’s housing shortage.

“Some of the suggestions for changes to the criteria make sense. Much of the criticism of HtB has come from the view that some of the people taking advantage of it are not the originally intended beneficiaries of the scheme. A recent study by company found that the average price paid for a property using HtB over the last year was £278,000 compared to £257,000 for transactions which did not use HtB. This takes into account the 16% premium new homes have over older homes. Some interpret this as the scheme enabling purchasers to buy higher value homes at the tax-payer’s expense so reducing the maximum property value limit and household income limit may go some way to answering the critics. The benefits of having special allowances which help NHS and emergency services personnel to live near their place of work would also be hard to dispute.

“Whatever the future holds for Help to Buy, UTB remains committed to supporting projects put forward by experienced house builders who can demonstrate knowledge of their market, knowledge of their customers and have a proven ability to deliver successful developments.”