Help to Buy equity loan applicants pay a quarter less than average new build property price

  • Government scheme improves entry level access to new build properties while easing financial burden on first-time buyers
  • HTB1 applicants pay typical price of just £193,318 – 24% less than new build average
  • HTB1 deposits are 84% lower than market average

While home buyers purchasing a new build property currently can expect to pay an average of £254,000*, recent data from Mortgage Advice Bureau shows that the typical Help to Buy equity loan (HTB1) customer is paying just £193,318 – almost a quarter (24%) less.

The average Help to Buy 1 purchase price has fallen for the third successive month, down 0.6% on July’s figure of £194,547. In contrast, buyers looking to purchase a new build property in the wider market faced a monthly increase of 5% (up from £243,000).

The data suggests that the scheme – which has a key focus on affordability – is improving access for entry-level purchases in the new build market and reducing the financial strain on first-time buyers.

The average LTV for a HTB1 property was 72% in August: 2% higher than the market average of 70%. Similarly, deposits paid by applicants using the Help to Buy equity loan scheme are also lower.

The total deposit paid – including the government contribution – was £54,134 for HTB1 applicants in August. Assuming that consumers opted for the full government contribution of 20%, HTB1 applicants paid just £10,827 for their deposit: 84% less than the whole-of-market average (£69,235).

This deposit represents 32% of a typical Help to Buy equity loan applicant’s income (£33,362), compared to more than two times their yearly income should they be forced to pay the average deposit in the wider market.

Andy Frankish, New Homes Director at Mortgage Advice Bureau, commented:

“New build properties are attractive to many groups of first-time buyers, offering a high standard of living without the need for renovation and lower maintenance costs. The Help to Buy equity loan scheme has been instrumental in making affordable new build homes more accessible, with the government’s contribution easing the burden of saving for a deposit.”

“Many mainstream lenders and builders have put their weight behind the scheme, giving greater choice and availability to consumers. However, as new build properties gain in popularity, the construction industry must ensure that production meets demand to ensure conditions remain affordable for those who are new to the market.”