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Help to Buy Scheme: The impact of the new regional price cap

The Help to Buy scheme has enabled thousands of first time buyers to move onto the property ladder since its launch in 2013. With changes being made from April 2021, money.co.uk explored which regions and cities could be negatively affected by new price caps.

Image of man and woman holding keys to new home

Since the launch of Help To Buy in 2013, 272,852 homes have been purchased through the scheme, enabling First Time Buyers to get onto the property ladder. The current scheme offers new homeowners an opportunity to purchase a newly built home worth up to £600,000, with just a 5% deposit.

However, from April 2021 the scheme is set to change. The new scheme will still allow buyers across the country to secure a mortgage on a new home with a 5% deposit, but now the government has drawn out new regional price caps that may prove restrictive for some.

With this in mind, the personal finance experts at money.co.uk have revealed the locations throughout England where the average price of a new build home is higher than the new Help to Buy spending cap in their given regions.

Help to Buy scheme: New regional price caps

The cities in England most affected by regional Help to Buy price caps 

Research reveals that cities affected by the new regional price caps span all regions of the country. Cambridge is the city where first time buyers are set to struggle the most to purchase a home as the average new build home costs £606,151.

This is almost £200,000 more than the price that the government has capped the scheme within the cities region (The East of England). Second on the list is the Yorkshire city of Ripon (+£120,324), followed by York (+£117,519) and Bath (+£111,002).

Overall new build homes in one in four (26%) cities across the country have an average new build house cost above their regional price cap.

Fist Time buyers looking to purchase in any of the 13 cities that would not be eligible for the new scheme should try to purchase a home on the existing scheme prior to March 31 if it is financially possible.

Boroughs of London

The price of the average new build home within eight of London’s boroughs do not fall within the regional price cap. This is despite the homes being capped at £600,000, a much larger figure than the rest of the country.

Within London, it is the more lavish areas such as Kensington and Chelsea (+£583,714), City of Westminster (+£461,581) and City of London (+£370,779), which have the greatest disparity between the Help to Buy price cap and the average cost of a new build

However, in other areas of London, such as Harrow, Croydon and Ealing, first time buyers are able to really utilise the large London price cap. The scheme allows hopeful residents to even purchase three bed properties, highlighting the help that it can offer to young people looking to move onto the property ladder within the capital.

London is the only area of England where there will not be a change to the cost of a home that first time buyers can purchase on the Help to Buy Scheme. 

Help to Buy hotspots across England

Out of all locations in England, Central Bedfordshire has been the most popular place in the country for first time buyers to invest in a property through the scheme, since it began. 

However, the average price of new build homes in Central Bedfordshire are in fact +£1,234 higher than the £407,400 price cap being introduced in the region in April 2021.

Additionally, four other local authorities among the 15 most popular Help to Buy locations are estimated to be negatively impacted by the new price cap being introduced. Leeds (+£19,355), Cheshire East (+103,304), Cheshire West and Chester (+£62,747) and South Gloucestershire (+£4,270).

Methodology

Money.co.uk analysed the cost of a new home within various locations of England, using the most recent data from the UK House Price Index.

The personal finance experts then compared the average house price to the regional price cap, to understand which areas of England hold the average price of a new home higher than the regional price cap being introduced in April 2021.

Sources:
https://www.gov.uk/government/statistical-data-sets/uk-house-price-index-data-downloads-july-2020
https://www.gov.uk/government/statistics/help-to-buy-equity-loan-scheme-statistics-data-to-31-march-2020

If you are looking to invest in a Help to Buy property, it is worth taking a look at our mortgage calculator, to understand what is the best mortgage for your particular circumstance.

Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.