Analysts told Housing Today the government should consider extending the scheme or replacing it with some other form of investment in the house building sector in Thursday’s Autumn Statement, given the challenge currently facing the sector.
Applications to buy a home in England through the
scheme, which requires a buyer deposit of just 5%, ended on October 31, and all
sales must have to be completed by the end of March next year.
Help to Buy sales have dropped from around nearly
50% of total sales for some housebuilders in 2020 after stricter criteria were
brought in from April last year, meaning it was only available to genuine
first-time buyers. But it has still made up around a fifth of sales this year
for a number of major developers, with Persimmon last week saying the product accounted for 20% of reservations since July.
The National Federation of Builders (NFB) has been
lobbying the government to extend the scheme. Rico Wojtulewicz, head of housing
and planning policy at the NFB, said the umbrella body wanted the government
“reform it in a way to ensure it supported certain criteria such as higher
energy efficient housing, on smaller plot sizes of houses only, or to help
specific people who struggle the most to borrow, such as families needing
bigger homes or single people”.
Lucian Cook, head of UK Residential Research at
Savills, said housebuilders were facing “a time of great uncertainty” and with
the “backdrop of planning” difficulties the equity scheme’s end “will
contribute to a decline in housing delivery over the next 18 to 24
months.” Savills has predicted a 10% fall in house prices in 2023, and last week the
Construction Products Association forecast a 10% decline in housebuilding starts.
Brian Berry, chief executive of the Federation of
Master Building, said: “The ending of the Help to Buy scheme could exacerbate
an already troubled market.” He added: “Public money is tight, but the upcoming
Autumn Statement is an opportunity for the Chancellor to commit to greater
investment in local planning authorities, which would release small house
builders stuck in the planning process and let them focus on what they do best,
delivering high quality homes.”
Tony Williams, chief executive of the consultancy
firm Building Value, said: “[Build] volumes are going to fall significantly.
There will be a significant fall in transactions and completions”. He suggested
it would be a “good idea” for the government to “bring something else out” to
replace Help to Buy.
Neil Hudson, founder of Residential Analysts, said
that the housebuilding sector was “facing a severe downturn”. Housing
market downturns would lead to a downturn in construction capacity, which
“takes a long time to recover”, Hudson said. “My suspicion is housebuilders
will be lobbying for a replacement,” he suggested.
Ross Smith, director at new build sales and
marketing business Site Sales, said: “Without the Help to Buy scheme, volumes
will inevitably drop unless extended or a combination of the government and
housebuilders collaborate to create alternative buying options to shared
ownership, ensuring sales volumes remain high on private sale housing.”
According to government data Help to Buy has
advance £23bn in loans since 2013, supporting the purchase of almost 370,000
houses worth almost £100bn.
The Home Builders Federation has not publicly
lobbied for an extension to Help to Buy because the government has been
previously so clear the scheme will definitely end. Neil Jefferson, MD of the
HBF said: “Help to Buy has been the most successful government home ownership
intervention in in history and handsomely delivered on all is pre-set
“For the first time in decades there is now no
Government scheme in place to support first-time buyers to purchase new homes
at a time where political and economic instability has seen mortgage
By Emily Twinch15 November 2022