RIP Help to Buy: what comes next?

In this guest feature, Ben Bailey, CCO at Even, a mortgage lender for first-time buyers launched this year, provides commentary on the end of the government's Help to Buy scheme.

Monday marked the end of the government’s Help to Buy equity loan scheme. While not without its faults, the scheme helped more than 360,000 people to buy a home since its launch a decade ago. Help to Buy was the government’s flagship home buying scheme and it played a huge role in helping people escape the rent trap. However, as of this month, applications for the scheme are closed and questions remain over what’s next for first-time buyers.

Help to Buy in context

There were, of course, downsides to the scheme - in recent years first-timers have been restricted to buying a new-build property, which significantly limits choice. That said, it indisputably gave a leg up to thousands who wouldn’t otherwise have been able to buy their first home and the end of the scheme puts into question just where first time buyers can best get support stepping onto the ladder.

If Help to Buy ending wasn’t enough of a setback for first-time buyers, high-interest rates and inflation have further stretched buyer affordability. Aspiring buyers may be forgiven for wondering where to look next. While they are much closer to the options available, even brokers might be wondering how they can place this type of business.

Of course the current climate doesn’t help, but first time buyers must not give up hope. Rather than mourning the loss of Help To Buy, those looking to buy their first home should consider the alternatives available to them. 

The end of Help to Buy hasn’t come as a surprise to industry and there has been significant innovation in the space in recent years and months. Several new solutions are now available that can help these people to boost their downpayment, even as house prices continue to increase. 

With the availability of low deposit mortgage products shrinking, the size of a buyer's deposit has never formed such a key part of buying success. New mortgage lenders have entered the UK mortgage market to help buyers boost their deposit, so that those who can't rely on the Bank of Mum and Dad don't lose out and can continue to access homeownership - helping them to begin building property wealth sooner. 

There is also some government support available since new applications to the scheme have ended to make your deposit go further. The First Homes scheme involves the building of new homes specifically to be sold at a discount of at least 30%. Shared Ownership or the Deposit Unlock scheme are other alternatives that first time buyers could consider to get onto the property ladder sooner.

This is where a good mortgage broker, who can advise on all the options, is worth their weight in gold. While first-time buyer cases can take more consideration than a vanilla customer, there’s a real opportunity for brokers to make the difference for first-time buyers who need it most, and to build a long-term relationship with a homeowner that will soon need to remortgage again. By engaging fully with the range of options available to these people, brokers can help more clients overall, support their long-term pipeline and help you navigate the complicated process. 

There’s clearly an untapped opportunity when it comes to the first-time buyer market. As Help To Buy disappears from view, it will be imperative that the industry as a whole bands together to pick up the slack and expand the options available to those looking to escape Generation Rent. 

With the scheme winding down, it’s important prospective buyers remember that the support available hasn’t completely ground to a halt, but merely changed form. As first time buyers consider the alternative solutions to get themselves onto the property ladder, its vital lenders and brokers across the industry come together so they receive the appropriate support and help ensure the property market functions effectively as existing homeowners look to move further up the ladder. 

*Ben Bailey is CCO at Even