Opinion: What comes after Help to Buy?

Closeup of man hand holding cardboard at new home. Young man unpacking boxes in new apartment. Man h

After eight years of helping people purchase newly built homes the Help to Buy (HtB) scheme is scheduled to end in April 2023 - Credit: Getty Images/iStockphoto

After eight years of helping people purchase newly built homes the Help to Buy (HtB) scheme is scheduled to end in April 2023.

Despite now being subject to regional price caps and restricted to first time buyers, there will undoubtedly be a big hole to fill when the support finishes. And although there is still 18 months to run, there are already a number of alternatives that could replace some of the demand.

Young happy real estate agent giving house keys to a couple who is buying a new home.

The Government’s flagship affordable home ownership scheme will offer new homes at a discount of at least 30 per cent compared with the market price - Credit: Getty Images/iStockphoto

First Homes
The Government’s flagship affordable home ownership scheme will offer new homes at a discount of at least 30 per cent compared with the market price, with this discount passed on to future sales. Here in the East, First Homes must be below £250,000 and will have to be sold to first time buyers with a household income below £80,000. Local authorities may also prioritise key workers.

However, we don’t yet know how many First Homes will be available for people to buy and it’s still unclear as to how many developers have started factoring it into their appraisals.

Male Realtor Showing Female Client Around House

With shared ownership, households buy a share of a home and pay rent on the remaining share to a housing association - Credit: Getty Images/iStockphoto

Shared Ownership
Households buy a share of a home and pay rent on the remaining share to a housing association. Since the purchaser only needs to pay a mortgage on the share they own, deposit requirements are lower than HtB. ‘Staircasing’ allows the buyer to increase their share of the property over time.

We have already seen strong demand for Shared Ownership at Laureate Fields in Felixstowe, while further properties will soon be available at Flagship Homes’ The Lilacs in Trimley St Martin.

Mortgage indemnity products
Lenders can insure their mortgages in case the buyer falls behind on their payments. They’ll also have some cover if the property is sold for less than the value of the mortgage. Lenders will pass the cost of this insurance onto the borrower, which may make it harder for some households to afford.

‘Deposit Unlock’ – launched by Newcastle Building Society and Linden Homes – is one example of a mortgage indemnity scheme already on the market offering 95 per cent loan-to-value (LTV) mortgages on new build properties. It is in trial format, but has the backing of 17 members of the Home Builders Federation (HBF).

Mortgage concept with tiny brick house on a stock of coins to show rising house prices

Some lenders can also insure their mortgages in case the buyer falls behind on their payments - Credit: Getty Images

‘Market Mortgage’ is another private-sector product that brings together house builders, lenders and an investment bank to provide 95 per cent LTV mortgages. Under the scheme, the lender provides a loan of 85 per cent LTV, while the investment bank tops up the additional 10 per cent and house builders make a contribution on every transaction. Large housebuilders including Persimmon, Bellway and Barratt are backing it.

When HtB ends, a combination of these private and intermediate products could well provide affordable routes onto the housing ladder.

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Even during HtB we have seen innovation from both Galliard Homes and Weston Homes which have both launched schemes that allow buyers to commit off-plan with a £500 reservation fee and five per cent deposit. It is this type of thinking that will have to continue if developers are to find inventive ways to support new homes sales in a post-HtB world.

For advice on the new homes market in Suffolk contact Max Turner at Savills Ipswich on 01473 234826 or MTurner@savills.com

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