Cushman & Wakefield’s Future of Demand report has outlined the areas in Merseyside, Cheshire, Lancashire, and Greater Manchester which will be “worst hit” when the Help-to-Buy scheme closes in 2023.
C&W has identified the top 20 boroughs and towns across the country where Help-to-Buy is most popular, and therefore potentially most at risk from seeing a slump in demand. Warrington placed in the top five for the whole of the UK. Knowsley was eighth, Tameside 11th, Wirral 12th, and Hyndburn 22nd. C&W said it received low response data from Hyndburn, and was actually likely to be in the top 20.
Without the scheme in place, C&W said a new system will need to be implemented to both keep up with the supply and demand.
In the report it stated: “A follow-on scheme from 2023 is essential to maintain the buyer demand levels required to bring forward anywhere near the 300,000 homes per annum the country needs. Without this we see demand, and subsequently supply, falling off considerably.”
C&W continued: “Rent-to-Own models as being a logical long-term solution to the tough route to home ownership. While previous incarnations in this genre, such as shared-ownership, etc., have had limited success, technological advances in both fractional ownership, through the Blockchain, and valuation by Accurate Valuation Models, should provide the perfect foundations for the delivery of a platform that has the potential for wide scale adoption.”
The Help-to-Buy scheme offers an equity loan where the Government lends prospective housebuyers 20% of the purchase price interest-free for the first five years. This is as long as the buyer has at least a 5% deposit and only on newly built homes. In London, you borrow up to 40% of the purchase price.
Since the inception of Help-to-Buy in Q2 2013, over 225,000 people have used the scheme on over £65bn worth of housing. In the final quarter of 2018, 63% of all new homebuyers in England used the Help-to-Buy equity loan scheme.
However, as much as Help-to-Buy has helped some people, it also has its downsides. These include the increase in loan price, which is not fixed; the scheme only applies to new-build homes; only certain lenders offer the scheme; you could end up in negative equity; fees and other terms can change dependent on Government policies.
Julian Cotton, associate director of C&W’s New Homes team in Manchester, said: “Help-to-Buy has unquestionably had a profound influence upon the success of the residential new homes market across the UK.” He then went on to say that without a replacement scheme in 2023 “the recent progress made in delivering the new homes desperately needed, is in danger of stalling and possibly doing into reverse.”
Lee Sale, managing director at Lovell said: “According to Lovell data, 70-80% of the people who used the Help-to-Buy scheme were first time buyers, which is when the scheme worked at its best. They’re the people who will be most affected when the scheme ends in 2023, so we’re hoping to see some provision in place to deal with its loss.
“The reality is that first time buyers can’t afford homes, and the ending of Help-to-Buy will have a damaging affect on the property industry as a whole.”