First-time buyers are paying a 27% premium to purchase a Help to Buy property. However, the claim has been rejected by the Help to Buy team at Homes England, who say it is based on wrong figures.
Analysis by a for sale by owner website, OkayLah, of Land Registry and Help to Buy figures from the third quarter of last year claims to show that the average first-time buyer house price was £236,000.
However, OkayLah claims those buying through the Help to Buy scheme – only available on new-builds – were paying £298,927, a difference of £62,927.
Homes England has said this figure is wrong, and that the correct figure is £246,128, making the ‘over-paying by a quarter’ claim itself an over-statement. The official figures are here: https://www.gov.uk/government/statistics/help-to-buy-equity-loan-scheme-statistics-april-2013-to-30-september-2018
The difference between the average cost of a Help to Buy property and what first-time buyers have been paying on the secondary market has increased since the Government scheme launched in 2013, says OkayLah.
In April 2013, the average first-time buyer house price was £197,000, with the price paid for a Help to Buy property cheaper at £186,091, but the gap gradually narrowed.
Paul Telford, chief executive of direct sales portal OkayLah, said Help to Buy prices have exceeded what first-time buyers were paying since the end of 2013.
He said: “It’s quite astonishing how out of shape the Help to Buy scheme now looks against the backdrop of the rest of the first-time buyer market across the nation.
“While it was implemented with the best intentions and initially did serve as intended, the consequences of further fuelling demand in an area of the housing market that was already in desperate need of additional stock is plain to see.
“What’s perhaps more alarming is that as much as half of the £1bn or so made by the nation’s biggest housebuilders has come from the Government subsidised scheme and essentially straight out of the taxpayer’s pocket.
“Not only has this pushed Help to Buy prices up massively, but it leaves those buying through the scheme on very precarious ground.
“While we are unlikely to see a market crash despite the slowdown caused by Brexit uncertainty, a notable softening of property values would leave many in negative equity when considering their Help to Buy property within the wider landscape of the first-time buyer market climate.”
| Quarter | Completions | Value of Equity Loans (£m) at completion1 | Total value of properties sold (£m)2 | Avg price paid per H2B property | Avg UK FTB House Price* | Help to Buy ‘Premium’ (£) | Help to Buy ‘Premium’ (%) |
| 2013 | 14,023 | 566.15 | 2,840.37 | ||||
| Q2 | 2,103 | 78.09 | 391.35 | £186,091 | £197,000 | (£10,909) | -6% |
| Q3 | 3,944 | 156.24 | 784.31 | £198,862 | £205,000 | (£6,138) | -3% |
| Q4 | 7,976 | 331.82 | 1,664.70 | £208,714 | £201,000 | £7,714 | 4% |
| 2014 | 28,376 | 1,226.04 | 6,160.42 | ||||
| Q1 | 5,581 | 235.21 | 1,181.89 | £211,770 | £205,000 | £6,770 | 3% |
| Q2 | 8,775 | 380.81 | 1,913.72 | £218,088 | £210,000 | £8,088 | 4% |
| Q3 | 5,846 | 252.67 | 1,269.99 | £217,241 | £218,000 | (£759) | 0% |
| Q4 | 8,174 | 357.36 | 1,794.82 | £219,577 | £209,000 | £10,577 | 5% |
| 2015 | 31,827 | 1,469.26 | 7,399.13 | ||||
| Q1 | 4,929 | 215.84 | 1,085.28 | £220,183 | £212,000 | £8,183 | 4% |
| Q2 | 9,355 | 429.76 | 2,163.86 | £231,305 | £212,000 | £19,305 | 9% |
| Q3 | 6,898 | 319.26 | 1,608.46 | £233,178 | £219,000 | £14,178 | 6% |
| Q4 | 10,645 | 504.4 | 2,541.54 | £238,754 | £217,000 | £21,754 | 10% |
| 2016 | 38,383 | 2,094.12 | 9,889.73 | ||||
| Q1 | 6,788 | 329.15 | 1,652.41 | £243,431 | £223,000 | £20,431 | 9% |
| Q2 | 10,814 | 583.66 | 2,787.65 | £257,782 | £220,000 | £37,782 | 17% |
| Q3 | 8,542 | 474.03 | 2,210.02 | £258,724 | £226,000 | £32,724 | 14% |
| Q4 | 12,239 | 707.29 | 3,239.65 | £264,699 | £225,000 | £39,699 | 18% |
| 2017 | 46,300 | 2,911.44 | 12,995.36 | ||||
| Q1 | 8,212 | 504.31 | 2,226.81 | £271,165 | £221,000 | £50,165 | 23% |
| Q2 | 13,863 | 870.61 | 3,884.48 | £280,205 | £228,000 | £52,205 | 23% |
| Q3 | 10,233 | 659.66 | 2,921.47 | £285,495 | £229,000 | £56,495 | 25% |
| Q4 | 13,992 | 876.86 | 3,962.60 | £283,205 | £225,000 | £58,205 | 26% |
| 2018 | 36,310 | 2,397.73 | 10,601.71 | ||||
| Q1 | 10,170 | 665.81 | 2,934.05 | £288,500 | £227,000 | £61,500 | 27% |
| Q2 | 14,950 | 967.06 | 4,322.67 | £289,142 | £232,000 | £57,142 | 25% |
| Q3 | 11,190 | 764.85 | 3,344.99 | £298,927 | £236,000 | £62,927 | 27% |
Source: OkayLah
I can only share my experience as a developer where 4 of our 7 properties we’re sold via help to buy. The sale prices suffered in the same way as local second hand properties of the same style and size.
By registering our site with help to buy we were able to help 4 people buy a home that otherwise they could never have aspired to.
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I’d be quite interested to understand how it ‘s possible to identify first time buyer properties in land registry and then having done so come up with an average price for smaller, fewer bedroom properties that’s as high as the land registry average for all properties.
I am not sure what investigation went into this story before it had a single sentence intro but to anyone familiar with the blandness of the land registry data will naturally question how all of those conclusions were derived from data that simply is not there.
There’s a certain familiarity about the quirky, faux-factness of this that has me wondering whether this has a connection to Essex; all the stuff at the weekend about agents being paid 6 times as much as solicitors and now this? All a bit coincidental or just propaganda?
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This isn’t a sector we have much to do with, so when we recently sold a property that had been bought with help to buy 3 years ago we were stunned at the difference in “new price” versus today. In three years the property has lost 10%. As it was purchased with assistance of the help to buy scheme, the selling price had to be assessed by a surveyor (at the sellers expense) and the validity of the price achieved reported to the help to buy team. We asked if the reduction would be a problem – “no, they’re all like this” was the response. In essence helpf to buy is a great idea, but as the article rightly says in execution it is allowing developers to make profit at the expense of the tax payer. And allowing people to buy a property they cannot otherwise afford, artificially inflating the achieved prices and putting them in real danger of negative equity, is madness…
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I wouldn’t pay too much attention to these numbers or the conclusions or all the group-think outrage over builders’ profits.
As for falling property prices and negative equity those are not unique to new build. The 2015 election, followed by the Brexit referendum then another general election and fears over a likely rise in interest rates mean that in some areas prices that were as much as 23% over their expected true value have fallen back.
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Source: OkayLah
’nuff said. Back to the news.
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Whether or not the scheme was intended to do this or not… we are seeing FTB coming in buying a 3/4 bed rather than a 2/3 bed if not using HTB. If you can get cheap money to get yourself a bigger property from day one why would you not take advantage and save on future moving costs? Those still buying the 2 beds either wouldn’t have been able to afford a property at all or don’t use HTB. I assume the analysis above is not taking into account property size because no one would pay 21% more for the same size property in the same location.
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Sadly, I think what is fundamentally a postive scheme to help 1st time buyers is being manipulated by some builders/developers, rather like the inflated “Shared Equity” Scheme of the past where Developers inflated the sale price of their property to then offer a worthless 80/20 Shared Equity purchase.
Fairness should be a given however the lure of the filthy lucre is too much for the unscrupulous builder/developer to resist. It’s why I distance myself from dodgy fast-buck developers.
Over the years I have shunned the dodgy developers and in recent years I have worked with a Charitable Company/Developer that seeks to get ex-offenders back on the right track, working in the building sector, instead of reoffending. It’s satisfying to see an ex-offender a year on from being released from prison, holding down a real job and realising that they can contribute positively …….versus the Range Rover/Rolex/Fake Tan/Gimme the Money Developer who only wishes to take the shortest route to profit.
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Good to see that the original article has been amended to acknowledge that the original content was nothing other than pure, unadulterated ********.
UNFORTUNATELY, the evidence cited is just as fatally flawed as Homes England don’t know how to read the table.
Other than that ever-so-significant factoid… job’s a good ‘un!
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