This is something I’ve discussed a number of times since its introduction in 2014 and particularly with directors of PLC house-builders. The end of Help to Buy has now been announced and it will be interesting to see what happens as a result of it. 

At the end of 2014 I remember calling a friend and colleague who is a director of a region for one of the large PLC house-builders. He was ‘buzzing’ with how busy they were and that they were ahead of target on house sales. I asked out of interest and mild cynicism how much of this was from Help to Buy related sales and his reply was “about 85%”. I was amazed and surprised and added caution to his enthusiasm by asking what will happen when the scheme is withdrawn. He couldn’t even consider a logical response as he was still ‘buzzing’. Interestingly I repeated a similar call to the same person in quarter 3 of 2015 and asked the same questions. Whilst Help to Buy related sales had dropped to around 70% it still demonstrated the point that the Help to Buy scheme was still a major part of their business.

Here we are in 2016 and time has been called on the scheme.

What will happen? Who will it effect? No one truly knows and I would assume the government will bring in some similarly supportive scheme to assist the first time buyers but not to the same strength. The economy has a whole needs a stable housing/construction market as it feeds so much of the economy in the broad sense so no dramatic changes will be introduced by any government to destabilise this. We don’t need excessive growth, we simply want ongoing stability and steady growth.

Will it effect house prices and has the scheme created a ‘false’ market? I would question the lack of discount and lack of flexibility by most of the PLC house-builders and I do feel this asking price/no negotiation approach has potentially inflated the market but only marginally. House-builders need buyers from all walks of life and of course need the first time buyer so their will inevitably be options, incentives and buyer assist schemes as the level of deposit will always create many first time buyers a problem, though there are more lenders lending at a far higher loan to value which means buyers won’t always need as high a deposit. There is a housing shortage and has been in the UK for more years than we can all remember so the simple supply and demand issues still stands and the government is committed to supporting the construction industry and targets have been set.

The next question of course is How will it effect the BUY TO LET PROPERTY market here in the UK? I think an old BLOG post may have covered something like this before but PLC house-builders used to be around 80% of our business but with Help to Buy this dwindled to around 5% of our business. We have simply concentrated on smaller independent house-builders and the lack of PLC buy to let property options has not effected the growth of the business BUT the withdrawal of Help to Buy will almost certainly bring the PLC house-builders back to the table and whilst we do not see discounts increasing we would expect more options to be available. Let’s see what happens! More options are always good for such a solid growth market where demand outstrips supply.