FIRST-TIME buyers in cities such as Cambridge and Northampton who plan to snap up a new-build won’t be able to use the new Help to Buy scheme, according to research seen exclusively by The Sun.
Currently, anyone moving to a newly built home and using the Help to Buy Equity Loan scheme can buy properties worth up to £600,000.
But from April next year, only first-time buyers will be eligible for the scheme and the government will set regional maximum property prices too.
It means hopeful first-time buyers will likely be priced out of Cambridge, as the average price of a new-build in the area sits at £571,774 – £164,364 higher than the proposed price cap for the East of England region.
Meanwhile, first-time buyers in Northampton will struggle too as the average new-build exceeds the price cap of the East Midlands region by £47,738, according to rental payments firm Flatfair.
Other cities and towns that are growing quickly in size where first-time buyers will miss out include Leeds, York and Bath.
Flatfair analysed the latest Land Registry figures for the average cost of new-builds in the Cambridge Arc area and northern cities, which are key to the government’s levelling up agenda, it said.
These were then compared to the regional price caps, which were first revealed in the 2018 Budget by former Chancellor Philip Hammond.
At the time, these were set at 1.5 times the forecast regional average first-time buyer price.
They range from £181,600 in the North East region up to a maximum £600,000 in London.
The Help to Buy Equity Loan scheme provides an interest-free loan for five years from the government.
The money covers up to 20% of the purchase price, or 40% in London, reducing the amount needed for a deposit.
The government is launching the reformed Help to Buy Equity Loan scheme on April 1, 2021 which will run until March 2023.
Last week, the government extended the current Help to Buy scheme by two months to help thousands of Brits buy new homes following the coronavirus crisis.
Franz Doerr, Flatfair’s chief executive, told The Sun: “While Help to Buy has helped many thousands of first-time buyers get a foot on the property ladder, any reengineered version of the scheme must go further so as to not exclude young people from high-growth areas.
“But for too many towns and cities, the proposed caps fly in the face of the Government’s ‘levelling up’ agenda and demonstrate a lack of joined-up thinking.
“By locking the very people — high-skilled, young professionals — out of the areas in which they are needed to drive economic growth and spatial rebalancing, Help to Buy 2.0 could already be dead in the water for many hopeful homeowners.”
The Sun contacted the Ministry of Housing, Communities and Local Government for comment.
Official figures show 273,000 properties worth a combined £73billion have been bought using Help to Buy loans since they were introduced in April 2013.
Completions using the scheme dropped 17% in March compared to the same time last year as coronavirus hit.
There are growing fears that buyers could be left in negative equity, owing more than the value of the property.
One in seven homes bought with a Help to Buy loan made a loss in the first six years of the scheme, figures reveal.
Meanwhile, first-time buyers have struggled to find mortgages with smaller deposits during the coronavirus crisis.