Millennials looking to get a foot on the housing ladder are now able to do so two years earlier because of the additional help from Help to Buy schemes, according to new research, but is buying through Help to Buy always a cheaper option than renting?
The study, undertaken by Compare My Move, found that it takes young and first-time-buyers in this country an average of 12 months to save up the 5% deposit needed to use the Help to Buy Equity Loan scheme whilst privately renting a property. In comparison to the three years it would take to save the necessary 15% deposit, this will save first-time buyers over £10,000.
However, there is a growing level of discontent with Help to Buy, with developers accused of selling new-build homes through Help to Buy at hugely inflated prices.
Fresh data, compiled by reallymoving.com, shows that homes being sold under the government's Help To Buy scheme are routinely overpriced by almost 10%.
Many experts believe that property firms are trying to cash in because they know first-time buyers who use Help To Buy can borrow much more money, and that is why a growing number of people are now opposed to Help to Buy.
According to a new poll of more than 2,000 people by property investment platform British Pearl, 31.5% did not support the scheme, designed to help people get a foot on the property ladder, with many believing it has actually made housing less affordable.
Of the third who were opposed to Help to Buy, 37.5% blamed it for property price inflation, while 35.8% argued the government should instead use the cash “to build more homes”.
More than a quarter - 26% - of those who disagreed claimed “it’s unnecessary and those who can’t afford to buy should rent” and 24.3% believe “the government shouldn’t interfere in the market”.
The damning poll also found Millennials were among the least likely to be in favour of Help to Buy, while older respondents were actually more likely to support it.
The study also revealed people in Norwich were the least likely to be in favour of the scheme, with just over half - 55.1% - in favour of it. However, in Bristol, more than three quarters - 75.9% - said they did support Help to Buy.
Income also impacted the perception people have, with those earning between £35,001 and £45,000 being the most likely to support Help to Buy (74.3%), while those taking home between £65,001 and £75,000 being the least likely (60.9%).
Since the first phase of Help to Buy was introduced in April 2013, the average UK property price has increased by 36.7% from £170,335 to £232,797 in August this year.
James Newbery, investment manager at property investment platform British Pearl, commented: “While there were certainly good intentions behind Help to Buy and it has helped people onto the ladder, our poll proves a significant portion of Brits are still to be sold on the scheme.
“Its merits are either not being communicated effectively enough to ‘Generation Rent’ or people are beginning to believe the scheme has become part of the problem rather than the solution.
“Public opinion is becoming jaded by a persistent lack of stock and ever-increasing property prices, so something clearly needs to be done to address Britain’s housing crisis and the country’s perception of how the Government is handling it.
“Millennials — who form part of the key demographic Help to Buy was designed to give a leg up to — clearly still have a bone to pick with what’s been laid on the table for them in terms of housing options.
“The digital revolution has benefited those with the cash to spend by offering them unitised ownership and, in turn, increasingly diversified portfolios. Yet it is young people who people who feel more disconnected from property than ever as platforms like British Pearl attempt to bridge that divide.”