A slowdown in new-build sales prompts discussions at ministerial level about how to boost demand.
A sharp slowdown in new-build sales has led the Government to consider introducing a successor to Help to Buy to support first-time buyers.
The Ministry of Housing is reported to be reviewing its legacy, assessing how earlier rounds of Help to Buy affected supply, prices and buyer access. It ran from 2013 to 2022 and allowed buyers to purchase a new-build home with a 5% deposit alongside a government-backed loan of up to 20% and 40% in London. Its findings will be published in a report in the spring.
Similar Scheme
One source involved in the discussions told the Telegraph a similar scheme is under consideration, although no decision has yet been reached.
Housing Minister Matthew Pennycook told MPs at a recent committee hearing that the Government is examining the issue, saying: “We are doing things in this space… we have no current plans for a replacement Help to Buy scheme, but we will continue to have those discussions.”
It comes as Savills figures show new-build transactions fell to their lowest level since the financial crisis last summer, with London sales hitting a record low. Housebuilders argue that without measures to stimulate buyer demand, Labour’s target of delivering 1.5 million homes by 2029 will be difficult to achieve.
Outlook
Whether the government proceeds with a new version of Help to Buy may depend on spring market performance and the urgency attached to meeting housing delivery targets ahead of local elections in May. Any decision would need to balance support for first-time buyers and housebuilders against Treasury concerns about public expenditure and potential market distortion effects.
First Time Buyers on the rise
First-time buyers accounted for 34.3% of all homes sold across Great Britain in January, the highest proportion recorded since 2006, according to research from Connells Group and Hamptons.
The data indicates a significant shift in market composition, with first-time buyers representing a growing segment of property transactions at a time when existing homeowners are moving less frequently.
Regional variations
In London, the first-time buyer share reached 48.3% of purchases, compared to 22.4% a decade ago, according to the newly-merged research team at Hamptons and parent company Connells.
The research shows that 93% of first-time buyers secured mortgage rates below 5% in January, the highest proportion since autumn 2022 and an increase from 67% in January 2024. Additionally, 24.2% of first-time buyers took out mortgages with loan-to-value ratios of 90% or higher, the largest share since 2008.
Mortgage term trends
The data reveals that fewer first-time buyers are extending their mortgage terms, with the share borrowing over 30 years declining from last year’s peak.
Aneisha Beveridge, Research Director at Connells Group, attributed the increased activity to falling mortgage rates, including the first sub-3.5% deals available in some time. “First-time buyers have been the biggest beneficiaries, particularly where higher loan-to-value products have become more competitively priced,” she said.
Market implications
Beveridge noted that rising first-time buyer numbers could support overall transaction levels in 2025, particularly as existing homeowners move less frequently. She added that the transition of renters into homeownership could potentially ease pressure in the lettings market if the trend continues.
The findings suggest a structural shift in the UK housing market, with first-time buyers playing an increasingly significant role in maintaining transaction volumes amid broader market uncertainty.