Help to Buy ‘encouraging’ first-time buyers to purchase more expensive property

The premium first-time buyers are paying for a Help to Buy property has risen further.

Analysis by conveyancing comparison website Reallymoving has found that first-time buyers using Help to Buy are now paying 12% more than those buying new builds without the scheme.

The data – based on 44,000 quote requests by users on the Reallymoving website – found the premium was up from 8% last October.

The website found those using Help to Buy paid on average £303,000 in February 2019 compared with £270,000 paid by those buying independently.

Its figures also showed that first-time buyers in January and February accounted for 57% of all home buyer activity, the highest level recorded, while almost one in five (18%) first-time buyers are now choosing a new-build home over a secondhand home.

Rob Houghton, chief executive of Reallymoving, said: “Help to Buy is indeed helping first-time buyers get on to the housing ladder, but these figures suggest that they may be paying more than the property is worth in order to get the help they need to raise a deposit.

“This could be either because developers are charging a premium or because first-time buyers are encouraged to buy a more expensive property because the scheme gives them greater spending power.

“Either way, when they come to sell, they may find their property is worth less than they paid for it, made worse by the fact they could be competing with other new developments nearby that are available with Help to Buy, while their own property is no longer ‘new’ and therefore ineligible for the scheme.

“I urge those using Help to Buy to consider how long they intend to hold the property, whether they can afford the loan repayments on top of their mortgage when the five-year interest-free period comes to an end and how easy it will be to resell.

“Meanwhile, housebuilder financial results speak for themselves, with Persimmon last month announcing profits of over £1 billion, or £66,000 per home sold.”

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11 Comments

  1. Paul

    It isn’t help to buy meaning that they are paying more.

    Htb only relates to new build, new build attract the premium not htb.

    New build in my experience sell for 10 to 15% more than the same resale home depending on market movements.

    This article isn’t really hitting the point.

    We all know you pay for the privilege to be the chap that drives the car off the forecourt for the first time and have the new number plate  houses are the same

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    1. ArthurHouse02

      But it is Help to Buy that is helping new build developers sell their over priced rubbish. It is helping developers push their prices up, if HTB didnt exist new builds would be cheaper and FTBs wouldnt find themselves saddled with increased debt down the line which they didnt realise was linked to the value of the property.

      Help to Buy is evil and is all about increasing developer profits and nothing to do with helping first time buyers on to the housing ladder.

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      1. Paul

        I agree htb is nothing more than another tory housing market vote winner. Same as tenant fee ban and right to buy. They cause macro problems in the market by addressing ‘the probkem’ on a micro level.

        It always makes me chuckle when mum and dad visit with child ftber. Becry high house prices then stump up all the deposit for junior. They don’t get that they are the problem and the stimulus of the market. Htb is just the govt playing bank of mum and dad, on the one hand sensationalising house prices and in the next breath pushing them up by short sighted policies.

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    2. Paul

      Help to Buy is making previously unattainable property attainable for some people.  It is depressing the 2nd hand market and the only people winning are the developers.

      As a flat market continues when these people come to sell in 2/3 years time and if H2B is still around in its current form or another incarnation, they will have two issues.

      1. They will be holding second hand stock that will struggle to sell as there is so much competition, which will put downward pressure on the price they try to achieve.

      2. This downward pressure on price coupled with the premium / inflated price they already paid, means they will owe more than their assets is worth.

      This has already started to happen.

      Who is H2B trying to help again?…………..

       

       

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      1. Paul

        P.S. Roz / Nick,
        I’ve emailed in about the username. 
        I’m sure Paul who opened proceedings is Paul, but clearly it’s going to cause confusion having a conversation with ourselves, especially if we have different views, so would be good if Paul could changed to Paul2 or similar and if you could look at your registration software to stop further duplicates.  Thanks. Paul!  
         

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      2. JMK

        Plus there is another issue for the FTB.  When they come to the end of the honeymoon deal with their lender they will revert to the SVR.  In times of property price inflation then they will have equity that they can use to negotiate a better deal with current or new lender.  With stagnation in the market they’ll be unable to do this and will be stuck on SVR.  Whilst I personally doubt interest rates are likely to go up much in the near future, their new mortgage rate could put them under significant financial pressure.

        However I’m sure there’s  mortgage consultants on the forum that are much better qualified to comment than I.

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    3. SRL

      The data is comparing the price paid for new builds with HTB, vs the price paid for new builds without HTB. So the new build premium has already been taken into account, Paul.

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  2. Peter Hendry

    These are all good points.

    Some call HTBs, HTSs Help-To-Sell because of the effects your describe.

    The only way to correct this massive anomaly would be through agency service change.

    Estates agents could actually lead the way here by putting the emphasis not on maximising selling prices but by helping buyers to move at locally determined prices instead.

    As quite a few of you may already know, the necessary changes are clearly set out online at a Googling of The Hendry Solution.

    If Tory governments refuse to effect such changes it must be left to the agents themselves to effect such essential changes from within.  This, they could certainly do by realising the financial benefits to the industry of adopting such a new transactional methodology.  The spin-off would be a stable level of throughput in sales across all national economic uncertainties.

    A win-win result if ever there was one.

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    1. ArthurHouse02

      It is not for us at a local and often small level to try and manipulate the housing market it is for government to stop meddling and let the housing market sort itself out naturally.

      Our job is to get the best price for the vendor and i can see any other scenario being given fairly short shrift.

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  3. Peter Hendry

    #ArthurHouse2

    If the housing market could sort itself out it would’ve by now. ;(

    Its up to all agents to help bring sales and purchases together by correctly adjusting asking prices to match the market.

    Over stating asking prices on a large scale, as is currently reported to be happening, does not help to make for increased sales in the market.

    Whilst your not so busy I’d like it invite you and your colleagues to fully read the proposal and its justifications.

    It’s up to agents to work in concert and help get the housing market functional for the majority at long last. You have a vital role.

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  4. PeeBee

    WHO THE CHUFF LET HENDRY OUT OF THE BOX??

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