Regions most at risk from withdrawal of Help To Buy revealed

Where regional caps create ‘cliff edges’ that could severely impact demand, Government needs to provide certainty or new solutions to meet housing delivery targets.


New research reveals the 24 council areas across the UK which could be worst hit by the planned changes to Government legislation on Help To Buy in 2021 – and when it ends in 2023.

Released by real estate specialist Cushman & Wakefield, the research identifies those councils with new homes markets considered to be potentially worst hit by the 2021 adjustment.

Government now needs to needs to provide certainty or new solutions to meet housing delivery targets the report says

Contributing factors include high levels of non-First Time Buyer (FTB) users with average new home values more than their respective new regional caps, citing the example of an approximate 25-mile stretch of border between the West Midlands and the South East where the new regional cap is 71% higher between the two locations.

From 2021, Help to Buy will be subject to regional maximum value caps, and unavailable to non-FTBs.

The report reveals that the caps will create ‘cliff edges’ in areas straddling regions with high and low caps, specifically the borders between the South East, and those of the West and East Midlands.

According to the report, this ‘cliff-edge’ risk is greatest in South Northamptonshire in the East Midlands.

With the South East region officially starting on its Southern border, 27% of current new home buyers being non-FTBs, and 82% of recent new home sales being above the new cap level for the East Midlands, the report estimates that from 2021 demand for new homes could drop by between 50-60%.

Other areas identified at being as being most at risk include: Rochford, Wychavon, Harlow, Fylde, Daventry, Rushcliffe, Charnwood, Blaby, East Northamptonshire, South Staffordshire, Northampton, Uttlesford, Nuneaton and Bedworth, Exeter, Mid Sussex, Redditch, Kettering, South Ribble, Chorley, Horsham, North West Leicestershire, East Staffordshire and Central Bedfordshire UA.

“Despite attracting some controversy regarding artificially inflating prices, there is no doubt that Help to Buy has been a success both in terms of helping people get on the housing ladder, and boosting new home construction rates.

“However, as the scheme begins to be phased-out, there is a real risk that demand for new homes in certain areas will be impacted significantly by its withdrawal, and possible re-financing issues may arise for a growing number of users, said report author Lee Layton, from Cushman & Wakefield’s Residential Research team

“The success of the scheme has also reinforced the already strong relationship between the national economy and our housing market, with the government effectively purchasing an active stake of 11% in all new homes constructed in 2018.

This will be of concern to those who already feel this bond isn’t a particularly healthy one,” he said.

The Help to Buy scheme was first announced in 2013 as a package of measures to support first-time buyers (FTBs) as well as others seeking to move house.

Since its introduction, the equity loan scheme element alone has helped more than 225,000 buyers purchase new homes with transaction values exceeding £60bn.

Its popularity has risen year-on-year from its introduction in Q2 2013, when 2,103 loans were issued, to the last quarter of 2018, when approximately 15,600 loans were distributed, totalling £1bn.

In the final quarter of 2018, 63% of all new home buyers in England used the Help to Buy equity loan scheme.

However, the scheme is now coming to a planned close with changes set to be introduced in the next four years.

The report also analyses the potential impact of the planned end of Help to Buy in 2023 and the locations where the scheme is most popular – identifying 22 local authorities where sales using the Help to Buy equity loan scheme accounted for more than 80% of all sales in the past 18 months.

Top of the list is Oxford with Gravesham, Waltham Forest, Kingston-Upon-Thames and Warrington making up the top five locations.

This research shows how badly impacted locations will be without the residential life support of Help to Buy.

A follow-on scheme from 2023 is essential to maintain the buyer demand levels required to bring forward anywhere near the 300,000 or so new homes the country needs every year, said Jonathan Stickells, Partner, Valuation & Advisory, Residential, Cushman & Wakefield.

“Without this, we see demand – and subsequently supply – falling off considerably which will have a significant knock-on effect,” he said.