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Record number of homes bought using Help to Buy equity loan and ISA

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02/12/2021
Homebuyers using Help to Buy to purchase a property reached a record high of 60,634 in the 12 months to June, taking total properties bought using the scheme to 339,347.

Between 1 April and 30 June, 10,824 homes were bought with the help of the government’s equity loan scheme, up 85% on the same period in 2020 when the housing market had been brought to a standstill by the coronavirus pandemic. However, completions were 27% lower than the same quarter in 2019.

Since the scheme was launched in April 2013, of the 339,347 homes bought with the assistance of the equity loan, 83% were purchased by first-time buyers.

Buyers using a Help to Buy ISA to buy their home also reached a record high. In June 10,989 properties were bought with a Help to Buy ISA, the highest monthly total yet. Overall, 435,798 homes have been bought using the dedicated savings account.

The latest version of the Help to Buy equity loan scheme, launched in April, is only open to first-time buyers and allows them to purchase a property with a minimum of a 5% deposit and use an equity loan of up to 20% of the purchase price (40% in London). The loan is interest-free for the first five years.

A Help to Buy Isa, no longer available to new applicants, allows savers to deposit £200 a month and receive a 25% government bonus capped at £3,000.

Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “Government schemes have provided a vital leg up for buyers as prices climbed this past year, through Lifetime ISAs, Help to Buy ISAs and the Help to Buy equity loan scheme. However, anyone considering the Help to Buy equity loan scheme needs to be aware that rising prices could also make their loan eye-wateringly expensive further down the line.”

When the government loan is repaid, the amount borrowers owe will be 20% of the value of their home at that time, not the amount they paid for it.

“The 12 months to the end of June saw the highest number of help-to-buy loans on record. With house prices rising out of sight, property deposits rose out of reach, and the loans helped close the gap, so that buyers only had to find the first 5% of the deposit. But while rising prices made this scheme more popular, they also made it far more expensive, and people need to understand the costs involved.”

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