Help to Buy drop off worse in north of England: full impact of new rules revealed

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Extra data supplied to Housing Today reveals regional impact of changes to Help to Buy rules

The largest drop-offs in Help to Buy activity in the third quarter of last year were in the north west and north east regions of England, analysis by Housing Today has revealed.

Official data yesterday showed Help to Buy sales nearly halved nationally in the third quarter of 2021, compared to 2019, with just 7,270 house purchases through the scheme. The data was the first to show sales solely through the new version of Help to Buy, which has stricter eligibility criteria and regional price caps.

Housing Today has now obtained a breakdown from the Department of Levelling Up, Housing and Communities (DLUHC) that aggregates Help to Buy sales by English region.

The data shows the North west has by the far the biggest drop in sales. Help to Buy completions are down 67% in the region compared to two years ago, equating to 1,186 fewer sales.

The North east, West midlands and Yorkshire & the Humber all saw big decreases of 57%, 56% and 52% respectively (see map and table below)

Activity is down in every single region of England, although the drop-off is markedly less severe in the south of the country, with sales dropping 30% and 34% in the south west and London respectively.

Change in Help to Buy Sales by region in Q3 2021 compared to Q3 2019

The steeper decreases in northern regions backs up the argument from the Home Builders Federation that the new rules have made the scheme unviable in parts of the midlands and northern England.

From April 1 price caps based on 1.5 times the average regional first-time buyer price have been in place. These range from £186,100 in the north east to £600,000 in London. The scheme is also now restricted to first time buyers.

An HBF spokesperson said the large drop offs in areas where the scheme had been popular, such as Manchster, Wigan, Cheshire, Newcastle and Rugby are ‘unsurprising.’ He added: “Ensuring first time buyers in particular continue to be able to access high loan-to-value mortgage products will be essential if housing supply levels are to be maintained.”

Help to buy sales in Q3
	2019	2021	Difference	% difference
North East	679	293	386	56.85
North West	1,764	578	1186	67.23
Yorkshire & Humber	1,127	545	582	51.64
East Midlands	1,469	798	671	45.68
West Midlands	1,307	580	727	55.62
East of England	1,680	977	703	41.85
London	1,710	1,135	575	33.63
South East	2,356	1,481	875	37.14
South West	1,261	883	378	29.98

Help to Buy offers an equity loan of 20% of the price of a new build home in most of the country, rising to 40% in London.

The DLUHC has previously said it anticpated lower delivery through the new scheme. A spokesperson said Help to Buy “is just one of the ways we are making homeownership more achievable and affordable”, citing the government’s shared ownership and First Homes schemes.