First-time buyers – are schemes really helping?

What should the government be doing to help FTBs on to the ladder?

First-time buyers – are schemes really helping?

The most recent Help to Buy ISA statistics show that since its inception, the scheme has supported 514,868 property completions, up 16,928 on the previous quarter.

Meanwhile, Help to Buy Equity Loan scheme statistics show that the scheme has supported 369,104 property completions since its 2013 inception, 8,018 of which completed between April 1 and June 30, 2022, down 26% compared to the same period in 2021.

So are the schemes really helping enough potential new property owners get their foot through the door?

Where they fall short

Karen Noye (pictured), mortgage expert at Quilter, said that while the schemes are well meaning, she believed the figures reiterate just how few first-time buyers are actually supported by them.

“House prices have grown rapidly over the past couple of years, yet the mean value of a Help to Buy ISA purchase price is just £176,456 compared to an average first-time buyer house price of £246,776 and a national average house price of £295,903,” she said.

According to Noye, the latest Bank of England interest rate hike will have only served to worsen the position of first-time buyers, with their affordability already stretched significantly due to the cost-of-living crisis.

Read more: Majority of prospective buyers delay home purchase plans, study finds

She added that the government needs to plough its energy into building more housing stock as opposed to opening any more schemes, as Noye said this will truly get to the root of the issue. The government has a target to deliver 300,000 new homes a year by the mid-2020s, however Noye outlined that with this deadline approaching, the government is still far from achieving it.

Producing results

Simon McCulloch, chief commercial and growth officer at Smoove, meanwhile, agreed about the stretch on affordability but by contrast believes that incentives and schemes from the government are the way forward to achieving the greatest results for first-time buyers.

Read more: Market outlook uncertain, warns chief economist

“While we would like to see how the existing stamp duty tax cuts will be implemented and maintained to encourage prospective buyers and stimulate the housing market, we would also like to see the government go further and reveal plans to help first-time buyers, specifically through other security or incentive schemes,” he said.

For example, McCulloch believes it would be useful if there are plans to incentivise mortgage lenders to re-introduce affordable rates, perhaps through a government-backed scheme.

He also wants to encourage property market innovation and new ways of digitising the home moving process, which could lead to an uptick in first-time buyer engagement.

“The analogue systems used today that are often protracted, confusing and stressful need replacing - it is time this process was fully digitised from beginning to end, with a standardised system in place,” he said.

McCulloch wants the process of home moving to be quicker and more efficient, which he said is particularly of use during current market conditions with lenders pulling rates at short notice.