Changes to the Help to Buy scheme mean that, from April 2021, the programme will be limited only to first-time buyers, who currently make up 81% of users. In addition, regional value caps will be introduced to better reflect regional variance in house prices. This will reduce the current value cap from £600,000 to as little as £186,100 in the North East.
A new publication by Savills has analysed what the impact of these changes might be for UK housebuilders. The firm reported: “The popularity of Help to Buy continues to rise. There were 52,404 Help to Buy loans issued in England in 2018/19, a 9% increase on the previous year and accounting for 34% of the open market, new build delivery.
“Outside London, limiting the scheme to first-time buyers has a fairly uniform impact, with 15-25% of current Help to Buy sales being excluded. But the impact of the price caps are more varied, with the greatest impact in high-value areas of the North and Midlands. With exchanges under the current criteria needing to happen by December 2020, developers will need to act now to adapt their product.”
Where will price caps have the most impact?
Taking the average per square foot value for current Help to Buy eligible sales and applying the new regional value caps, Savills calculated the maximum square footage developers can build to fit under the new value caps.