INTEREST in chancellor George Osborne’s controversial Help to Buy scheme is accelerating among buyers, even amid warnings that it is doing nothing to boost the UK’s supply of homes.
Up to March, 7,313 applications for the mortgage guarantee part of the scheme had been approved. Demand was much stronger in the later months of the scheme – though it has been running since an early launch in October, Berenberg’s Rob Wood note that 2,657 of the scheme’s uses, more than a third, were in March alone.
But the programme has done little to boost housing supply or bring homes to market, according to analysis from Zoopla.
The property site says that the number of homes eligible for the scheme on sale has dropped 1.9 per cent since it was introduced, with a more sever 7.4 per cent drop in the south east of England.
The users of the policy are also still largely outside of London, where only five per cent of the transactions go ahead. As a result, Help to Buy represents only 0.6 per cent of mortgage lending in the capital, in comparison to 1.3 per cent in the UK generally and 3.3 per cent of lending in the east of England.
With buy-to-let and second home purchases not allowed on the scheme, 85 per cent of the people who have used it so far are first-time buyers.
The vast majority of the homes are also nowhere near Help to Buy’s upper price limit – the scheme can be used on homes costing up to £600,000. But only 2.6 per cent of the use of the policy has been on properties worth more than £350,000. The median price of a property bought in the scheme was £134,950.
Despite claims that Help to Buy is assisting people onto the housing ladder, the average earnings of people accessing the scheme are almost exactly the same as the average mortgage applicant. The median household income of users is £42,597, against a market average of £42,731.