More than 60,000 homes have been bought with a Help-to-Buy scheme in the last two and a half years according to statistics released by the Department for Communities and Local Government.
In total, 62,569 people have bought homes using the equity loan scheme. The value of the loans totals £2.71 billion.
81% of those using the scheme were first time buyers with the total value of homes bought adding up to £13.64 billion.
However the scheme is only being used in 3% of transactions, falling to just 1% in London, with questions being raised over its effectiveness.
Doug Crawford, CEO of My Home Move said: “The jury is still out on whether the Help-To-Buy Equity Loan scheme is helping as many first-time buyers as it could. Our data reveals that nearly half (47%) of buyers using the scheme rely on a gift for some or all of the deposit.
“Clearly, a significant chunk of those using the scheme still require extra help from the bank of mum and dad, even though the scheme means they need a smaller deposit than normal. This means there is a big question mark over what first time buyers could do without Government support. It also means that many who are unable to rely on cash gifts from family and friends are cut off from their dream of home ownership even with schemes like this in place.
“The scheme’s limitations are also reflected in the average cost of a house purchased through it. According to the DCLG, the cost of a house typically purchased with an Equity Loan stands at £217,999, 8 times the average salary, raising questions over whether such homes really count as affordable.
“Policymakers’ intentions with regard to the Equity Loan scheme are clearly noble, and it has certainly helped many people to get a foot on the ladder who could have otherwise struggled. However, the fact that so many remain reliant on gifted deposits illuminate its shortcomings. As prices continue to rise, the Government must do more to support popular homeownership.”
Andrew Bridges, Managing Director of London-based estate agents Stirling Ackroyd believes the scheme is a sticking plaster on the problem of housing, particularly in the capital.
Andrew Bridges said: “Help-to-Buy is a radical scheme for drastic times – but it will never be enough to shift the dial fundamentally. Because it is not Help-to-Build.
“First time buyers are facing a sheer cliff of house prices. Particularly in our capital city. Just a one bedroom flat already costs more than the £450,000 upper limit for the Help to Buy ISA in two thirds of London postcodes – and will in time push past the £600,000 limit for the Help-to-Buy scheme itself.
“So special schemes like this are a leg-up onto the housing ladder – for today’s potential buyers, not necessarily tomorrow’s. Helping current buyers speed up their ambitions is honourable – but is likely to only boost prices further. We’re seeing prices accelerate in the capital again now, even into the winter months. In light of this, there is a creeping danger that the Government focuses only on shorter-term solutions, and not the long-term challenges too.
“In the long run, there’s only one thing London’s first-time buyers need from the government – more homes to live in, whether as owner or tenant. Planning officials need steadily increasing targets for new homes, not a vaguer preference for rejections.”