Help to Buy - Market Update

Here is how changes to Help to Buy in 2021 will impact the market.

What's changing?

The Help to Buy Equity Loan scheme was announced by the Government in the March 2013 budget. The scheme helps buyers to raise a deposit by providing an interest free loan of 20% (40% in London). It is currently open to all buyers (first-time buyers and existing homeowners) of new-build properties priced up to £600,000.

From 2021 the scheme will only be available to first-time buyers. In addition, new regional price caps will be introduced.


What we did

CBRE Research analysed how the two changes will impact housing markets across England.

1.First-time buyers only

Using 2018 Help to Buy sales data, we identified the extent to which the scheme has been used by existing homeowners to estimate the impact on new-build sales post-2021.

2.New price caps

Using Land Registry data, we analysed first-time buyer prices across the country and added a new-build premium. This gave an estimation of the average price of a new-build home bought by first-time buyers.

We then applied CBRE regional house price forecasts to project these prices to 2021. The results show which local authorities will be priced above the new price caps in 2021.


What we found

Based on previous levels of transactions, excluding existing homeowners from the scheme could reduce overall new-build sales by 9%. The largest impact would be in the East Midlands where 26% of Help to Buy sales in 2018 were to existing homeowners.

Our analysis shows that there are local authorities in all regions where the current new-build first-time buyer price is already above the proposed cap. Overall, 15% of local authorities are currently above the cap, but this is significantly higher in some regions. By 2021 we estimate that prices in 24% of local authorities will be above the new caps.

The accompanying map sets out our high-level findings. To discuss our research at a more granular level, please do not hesitate to get in contact.