Help to Buy deadline extended until May - but how can builders entice new buyers?
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Since its launch in 2013 Help to Buy has been a major factor in the strong performance of the new build sector – enabling people to purchase a new build home with only a small deposit.
However the scheme becomes more restrictive this year – available to first-time buyers only and subject to regional price caps.
The latter part of 2020 therefore witnessed a flurry of activity as buyers looked to take advantage before the changes came into effect, with housebuilders having to complete homes by the end of December for their schemes to qualify.
But Covid-related delays meant many developers were unable to finish their projects in time and as a result some buyers looked set to miss out on the support.
However last week the government announced the December deadline would be extended to May, giving housebuilders some extra breathing space and providing reassurance that they would still be eligible to buyers mid-way through a transaction.
It is yet another demonstration of just how important Help to Buy has been for the new homes sector and – with the scheme set to end completely in 2023 – a reminder for developers that they will need to broaden the appeal of new homes if they want to support future sales.
Our research team at Savills has examined the profile of current new homes buyers to help pinpoint where opportunities could lie.
Young families with children
The largest buyer group in the new build market, making up 30 per cent of purchases. They have the greatest tendency to buy new homes over second-hand ones and their significant use of Help to Buy has enabled them to purchase slightly larger and higher value homes.
Unless there is comparable financial support post-Help to Buy, lower income young families will be unable to buy new, and continuing to attract those with higher incomes will need to be a key focus. Providing affordable family homes in areas with good primary schools, nurseries, playgrounds and parks will be important.
Young couples and singles without children
These buyers have a higher than average tendency to opt for a new build. They have 30 per cent higher incomes and pay 26 per cent more for a new home compared with those buying second hand, despite choosing similar sized properties.
Providing more homes of this size in well-connected places with access to cafés, restaurants and convenience retail will be key. Health and wellbeing amenities will also be important, as could nurseries and playparks for those considering starting a family.
Accounting for 18 per cent of new-build sales, this group is only slightly more likely to buy new than the average buyer. They buy the largest new homes and have similar incomes to their second-hand market contemporaries, but they pay 21 per cent more on average and a significant proportion uses Help to Buy. Providing larger homes that this group can still afford in areas with schools, parks, sports facilities and convenience retail are important factors.
Middle-aged couples and singles without children at home
Only seven per cent of these buyers go for a new home over a second-hand one and they rarely use Help to Buy. Good local amenities and spacious accommodation within a strong community setting are incentives here. It’s worth noting that if the current seven per cent of buyers rose to 10 per cent it would equate to 4,900 more sales a year.
Again just seven per cent buy new and those who do have 27 per cent higher incomes and are more likely to choose a flat or a detached house.
Energy efficiency, ease of maintenance, strong communities and good services are all relevant here. There is a huge opportunity to provide attractive housing for this group. If
10 per cent of the current over-60s market could be attracted to new-build, it would represent 3,800 more sales per year.
For advice about the new homes market in Suffolk contact Max Turner at Savills Ipswich on 01473 234826.