It is proving particularly popular with people who are currently renting, the latest quarterly market review from Countrywide shows.
The data also shows that the income of the average Help to Buy purchaser moving from privately rented accommodation is £41,000, while 35% of households renting earn less than £30,000.
There has been a particular bias towards lower income renters in London and the South East, where 40% of renters using the scheme to buy their first home earn under £30,000.
Indeed less than 20% of Help to Buy backed purchases were in London and South East, proving that Help to Buy is not fuelling a property bubble as some have suggested.
Help to Buy purchasers who previously lived with their family, account for 30% of those using the scheme, a significant proportion of all users of the Help to Buy scheme. They are typically first time buyers still living at home, unable to access the private rented sector due to the cost of rent, or are unwilling to do so due to a desire to save for a deposit more quickly.
As a consequence, these people tend to be younger than average, earning 16% less than those living in the private rented sector. Half of these purchasers are single person households and this means that housing costs take up a larger proportion of their income. In the majority of cases, these are new households who were saving for a deposit while paying reduced or no rent.
Help to Buy has provided a lifeline to many home owners in parts of Northern England where falling house prices have eroded the equity they hold. For existing home owners in parts of Northern England who bought in 2006 or 2007, Help to Buy has provided a lifeline after falling house prices have reduced the equity of many households, preventing them moving. In the North East, almost 30% of homes purchased through the scheme have been bought by existing home owners.
‘The Help to Buy scheme is enabling a growing number of households to achieve their aspiration of homeownership at a time when the proportion of high loan to value values is historically low,’ said Nigel Stockton, Countrywide Group financial services director.
‘Given that the scheme is funded by the government, it is important that those using it would otherwise find it difficult to buy without assistance. This has almost exclusively been the case with the majority of purchasers coming from the private rented sector or the parental home,’ he explained.
‘As home ownership rates decline, particularly amongst younger age groups, Help to Buy increasingly represents the way many new households are able to get onto the housing ladder. Help to Buy remains an extremely popular policy among aspiring home owners. While the use of the scheme by existing home owners is perhaps less politically acceptable, they tend to be households with little or no existing equity in parts of the country where house prices remain below the levels at which they bought,’ he added.
The report also points out that taking into account population growth, the UK has consistently built among the fewest number of new homes in Europe both pre and post-recession. Between 2004 and 2013, the UK built the third fewest number of new homes, one for every 2.5 new people residing in the UK. Whilst the recession reduced the number of new homes built, it hasn’t changed the UK’s relative position in Europe. Between 2007 and 2013, UK house building fell by 35%, similar to the 32% falls seen across Europe.
