Record number of households in England using Help to Buy equity loan scheme

The scheme helps people on to the housing ladder by providing a loan to put towards the cost of buying a newly-built home.

A record number of households across England bought their home with support from the Help to Buy equity loan scheme in 2020-21, Government figures show (Jonathan Brady/PA) (PA Archive)

A record number of households across England bought their home with support from the Help to Buy equity loan scheme in 2020-21, Government figures show.

More than 55,000 households purchased a property with the support of the initiative during that period, marking a record year for the scheme.

Launched in 2013, the scheme helps people on to the housing ladder by providing a loan to put towards the cost of buying a newly-built home.

The total value of these equity loans has now topped £20 billion, with the value of the properties sold under the scheme passing the £90 billion mark.

Overall, 328,506 households have purchased a home through Help to Buy.

The scheme can be used to purchase a new-build property up to the value of £600,000, with a maximum equity loan of £120,000 (20%).

In London the maximum equity loan is £240,000 (40%).

Since April 2013, the average purchase price of properties bought with a Help to Buy equity loan has been £277,264, with an average loan of £61,217.

Up to March 31 2021, 18% of transactions were for flats and 82% were for houses.

It was also recently announced that home-builders can bid for a share of £150 million to support the rollout of the new First Homes scheme helping first-time buyers on to the housing ladder.

Housing Secretary Robert Jenrick said: “Over 55,000 households bought their home with the support of Help to Buy equity loan last year – a record year for the scheme, which is helping young people and first-time buyers feel the sense of pride and achievement that comes with owning your own home.”

Holly Roberts, 27, who has benefited from the scheme, having recently bought a property in Poole Dorset, said: “I wouldn’t have been able to get on the housing ladder without Help to Buy.

“That equity loan just helped me bridge the gap between what I could borrow from a mortgage and the sort of prices I was looking at around this area.”

First-time buyers can find home ownership schemes via the Own Your Home website.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “Help to Buy equity loans provide an answer to the impossible question of how to buy in a rapidly rising property market.

“Most people who use them have a 5% deposit, and the scheme stops them battling to raise a bigger percentage of the property price at a time when the average property rose more than £27,000 in a year.”

Help to Buy isn’t your only option

Sarah Coles, Hargreaves Lansdown

She warned: “When the loan is eventually repaid to the Government, the amount that needs to be paid back depends on the value of the house at that time.

“If you borrow 20% of the purchase price, you repay 20% of the value after five years, so when prices rise, so do your repayments.”

Ms Coles continued: “If you’re working hard to build a deposit, Help to Buy isn’t your only option.

“If you’re aged 18 to 39, and you plan to buy your first property a year or more down the line, you could also consider saving at least some of the deposit in a Lifetime Isa.

“You can put £4,000 a year into a Lisa and the Government will immediately top it up by 25% – so you could get £1,000 a year from the Government to help you on to the property ladder. And, through the Lisa, this never needs to be paid back.”