First time buyers using Help to Buy pay more for new homes

First time buyers in England buying a new home using the Government’s Help to Buy Equity Loan scheme are paying on average 10 per cent more than those buying new homes without Help to Buy, research from reallymoving has discovered.

According to data collected from 41,500 first time buyers using the online system for home move services over the last year, those purchasing a new build home with Help to Buy in England paid on average £303,450 in the twelve months to September 2019. Calculated at postcode area level to account for regional variations, the premium paid by those using Help to Buy Equity Loans was 10.3 percent. 

According to this data, first time buyers accounted for 54 per cent of all homebuyer activity in September 2019, and 14 per cent of these opted for a new build property. A competitive mortgage market and historically low interest rates alongside Help To Buy, have supported these transactions.

The Help to Buy ‘premium’ is highest in the north and parts of the Midlands, with first time buyers using the scheme in Yorkshire, the West Midlands and the North West paying approximately a fifth more (21.6, 21.5 and 19.9 per cent respectively) than those buying new homes independently. Scotland has also seen a rapid increase in the premium paid by those using Help to Buy over the last year, peaking at 14.7 per cent in September 2019. 

In London, the Help to Buy premium has remained relatively stable throughout the past twelve months and currently stands at 11.8 per cent – very slightly higher than the English average. 

The current Help to Buy Equity Loan Scheme will be replaced by a new version launching in April 2021 that will be restricted to first time buyers only and for properties with a market value up to new regional price caps. It will run for two further years before closing in March 2023.

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