First time buyers are fuelling the market but what happens when Help to Buy runs out?

By Linda Kirk, director of conveyancing

Two new surveys released recently show a very positive outlook for the housing market at the start of the year. But is the optimism sustainable, or is it doomed to fizzle out with the end of Help to Buy incentives?

The most recent English Housing Survey suggests that in the last year, the level of younger owner occupiers has grown significantly with the percentage of 25 to 34-year-olds getting on the housing ladder growing by 3.6 per cent in 2019.

Similarly, one in four private renters also indicated that they will be looking to buy within the next two years.

This positive picture is backed up by the recent Royal Institute of Chartered Surveyors (RICS) Residential Market Survey, which indicates more positivity in the housing market as surveyors reported an increase in new buyer enquiries and agreed sales in December.

The two surveys back up what we are seeing at Adkirk Law, with a growth in conveyancing for new build properties, either for first time buyers or as part exchanges for people looking to upsize as a result of this movement in the market.

There’s no doubt that first time buyers are fuelling a new growth in the housing market, particularly in the North West. But how long can that last, when changes to the Help to Buy scheme are on the horizon?

The Help to Buy equity loan has been extended until 2023 but with a more restrictive and regional price-cap on how much it will lend. It has already led to concern that new builds in some areas such as Chorley, South Ribble and Fylde will become unaffordable for first time buyers.

Indeed, other North West areas such as Warrington, Knowsley, Tameside, Wirral and Hyndburn all rely heavily on Help to Buy equity loans to make properties affordable. As such, a solution needs to be found to ensure growth continues in those areas after 2023.

Many mortgage lenders still seem reluctant to fill the gap that will be left by the end of the Help to Buy scheme, with the number of 95 per cent mortgages on the market very low, leaving it a less competitive marketplace than smaller loan to value mortgages.

Help to Buy was never intended to become a permanent solution to the housing market, but if the country is to continue growing its housing sector and helping more first time buyers onto the ladder then a solution between the government and private sector needs to be found.

The Housing Minister Robert Jenrick MP has suggested another extension may be on the table, but there will be many developers, lenders and buyers who will be keeping a close eye on what the future holds.

In the meantime, first-time buyers are completing transactions while the incentives are still in place and before the end of the Brexit transition period at the end of the year. For those first time buyers, as well as people looking to part exchange to a bigger property of downsize, our friendly and no-nonsense conveyancing experts can help your house sale or purchase go through with the highest possible service.

For a free, no obligation quotation, please call us today on 0330 111 9728.