Workers on £100k snap up Help to Buy homes

Soaring numbers of properties sold under the Help to Buy scheme are being snapped up by buyers who earn more than £50,000 or even £100,000.

David Byers 

Campaigners complain that poorer families are being forced to remain in rented property while middle class buyers take advantage of interest-free government loans.

Some 58 per cent of Help to Buy properties in England were sold to people with household incomes of more than £50,000 in the six months to June last year, compared with 29 per cent when the scheme was launched in 2013. One in 14 properties went to buyers with a household income of more than £100,000, compared with one in 30 when the Help to Buy loan scheme was launched.

It was targeted at first-time buyers, but the Ministry of Housing figures show that about one in five homes were bought by people who had previously owned a property.

There has been an increase every year since 2013 in the proportion of Help to Buyers with a household income above £50,000. This shows that the government is increasingly throwing interest-free loans at middle-class buyers who might be able to get on the property ladder without them, campaigners said. They also criticised the scheme for driving up property prices — and builders’ profits in the process.

Meanwhile poorer families are being marooned in the rental sector.

The Help to Buy equity loan scheme lends buyers 20 per cent of the property price (40 per cent in London) interest-free for five years. You need to raise a 5 per cent deposit yourself and have to be buying a new-build home. At the moment loans are available on homes worth up to £600,000 in England, but lower regional price caps will apply when the scheme changes on March 31.

The 20 per cent loan allows buyers to get the cheaper mortgages that are available to those with deposits of more than 1 5 per cent.

It is thought that one reason for the increase in high-earning buyers using Help to Buy is that property prices have risen faster than wages, leaving more people unable to afford a home without help. It is also thought that many lower income buyers find it impossible to raise even a 5 per cent deposit, leaving more properties for wealthier buyers.

Lindsay Judge, a research director at the Resolution Foundation, a think tank focused on improving incomes for lower earners, said: “The scheme is clearly benefiting many who could have bought a property without financial support from the state. The time has come to restrict the scheme to those who need it most. At a point when there are so many other demands on the public purse, a household income cap would reduce the deadweight.”

Almost half (47 per cent) of the buyers who have used the loan scheme since it began had a household income above £50,000, and 5 per cent earned £100,000 or more.

About 279,000 homes have been bought under the scheme for a collective total of £75.06 billion. The government has lent a total of £16.46 billion. Reuben Young from Priced Out, a campaign for affordable house prices, said the government was “literally taking public money and investing it in rising house prices”. He added: “These stats are yet another nail in the coffin for Help to Buy. It is helping many who already could have afforded homeownership to simply buy larger homes than they otherwise would have.”

The average price of a property bought with Help to Buy money was £269,385 in June last year, about £33,000 more than the national average house price.

In 2019, 55 per cent of those who used Help-to Buy had a household income of more than £50,000 and 6 per cent earned more than £100,000. In the same year the National Audit Office, the public spending watchdog, calculated that 63 per cent of buyers who used the scheme could have afforded some sort of property in their area without it, and almost a third could have secured a big enough mortgage to buy the home that they wanted.

The government has made changes to target those who most need help. From April 1, Help to Buy will be available only to first-time buyers in England. Scotland is scrapping the scheme and Wales has extended it for a year. Builders and buyers want the existing scheme to be extended because of construction delays caused by the pandemic, however. Buyers hoping to get a loan fear that they will miss out on the homes they want because they will be caught out by the new price caps.

Mark Finch, a mortgage adviser specialising in newbuilds in the northeast of England, said the Help to Buy scheme continued to have an important purpose.

“The property market has been affected by a lack of mortgage availability for first-time buyers, and there are close to zero deals in the 5 per cent deposit bracket at the moment.

“If you have no family help, you have no choice but to use Help to Buy to get on the ladder.”

The Ministry of Housing was contacted for comment.

Help to Buy: the key numbers


Home sales since the scheme started in April 2013


Buyers who took out a Help to Buy loan with a household income of more than £50,000


Buyers who took out a loan with a household income of more than £100,000


Buyers using the scheme who had bought property before


Equity loans had been repaid by April 2020


Interest rate payable from April 1 on a loan issued before December 31, 2013

Figures for England to June 2020. Source Ministry of Housing, Homes England