Estate agency chief warns Help to Buy is ‘ticking time-bomb’

Propertymark has issued a warning to the government that it needs to take the the potential Help to Buy ‘time-bomb’ seriously.

The news comes as London lettings agent Benham & Reeves’ latest study revealed that the Government is now pocketing thousands of pounds more in interest from Help to Buy homeowners who have reached the end of their five-year interest free period.

HELP TO BUY

The original Help to Buy scheme ran from 1st April 2013 to 31st May 2021, offering an equity loan of up to 20% on the purchase price of a new-build home of up to £600,000, climbing to a 40% loan for those buying in London.

But the 5-year interest free equity loan meant that the government had an entitlement to a share of the future sale proceeds equal to the contribution required to assist your purchase.

Propertymark’s Housing Insight Report also found that the number of first-time buyers has been on a continued rise since May this year. June 2023 saw a spike in sales to first-time buyers, reported at 35% compared to 25% the previous year.

PROPECTIVE BUYERS

New prospective buyers registered per member branch are also on the up with 81 reported in August 2023 from 64 in July 2023, demonstrating that the urge to purchase a first property or to make a move within the property chain remains strong.

Nathan Emerson (main picture), Propertymark Chief Executive, says: “In its initial stage, Help to Buy was a sound idea to help the younger generations in particular get onto the housing ladder in the midst of the 2008 financial crisis. However, it was never going to be the final solution to what then became a housing crisis in the UK.

The after-effects could create a dangerous housing bubble.”

“The Government needs to look beyond Help to Buy now as the after-effects of such a policy could create a dangerous housing bubble. They need to look at measures that increase housing supply and thereby reduce house prices across the UK.”