Help to buy scheme
Help to Buy

UK’s Help to Buy scheme is being used for ‘upsizing’

More than 32,000 households have used the UK government’s flagship Help to Buy scheme to trade up for bigger properties rather than buying a first home since the policy was introduced in 2013, according to new analysis.

Help to Buy offers borrowers an equity loan of up to 20 per cent of the value of a newly built home in England, or 40 per cent in London. Homes bought with Help to Buy equity loans, which are interest-free for five years, must be valued at £600,000 or less and be a homeowner’s “main residence”.

According to official statistics, almost 170,000 homes have been bought using the scheme since it was introduced.

But while four out of five households are using the scheme to get on the property ladder, one in five are not first-time buyers, according to analysis by Hamptons International, the estate agency.

Aneisha Beveridge, a research analyst at the estate agency, said the scheme was being used by some buyers to move up the housing ladder.

Almost a quarter of current homeowners using the scheme are buying properties worth more than £350,000, compared with a tenth of first-time buyers since the scheme launched, according to Hamptons.

“You can see from the data that they earn more, so are likely to be able to borrow more,” said Ms Beveridge. “They’re putting up bigger deposits so they might have accumulated more wealth.”

According to Hamptons, non-first time buyers have been twice as likely as first time buyers to be able to stump up a deposit of more than 15 per cent of the value of their home, with almost a quarter able to provide such sums. Hamptons said these buyers were able to use the equity from their first home to generate a larger deposit.

In London, non-first time buyers have a median household salary of £71,300, while first-time buyers using the scheme have household incomes of £63,112, according to official figures. Across England, the salary difference between the two sets of buyers is about 20 per cent, with households buying their first home earning £44,459, while households using the scheme to trade into bigger homes earn £52,743, on average.

Lawrence Bowles, a research analyst at Savills, said the non-first time buyers were probably “upsizing” into bigger homes as their life circumstances changed.

“They might have met someone, but they don’t have enough equity to trade up, so they need to rely on the loan,” he said.

“It’s about helping people access the right kind of home ownership, and yes, some of these people might be on high salaries, but it doesn’t necessarily mean they can afford the home they need,” he added.

Date published: 26 August 2018

Aime Williams in London


Word count: 445

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