Helping first-time buyers get a leg up onto the property ladder is considered a priority but high house prices mean it remains a pipe dream for many.
However, there are still a few pockets in the UK where it’s possible to buy after saving a relatively small deposit.
Finance website Totally Money has crunched the numbers and discovered the top 10 hotspots across the UK for buyers purchasing their first home with the help of the government’s flagship housing support scheme, Help to Buy.
How much would you need to save for a deposit buying with Help to Buy?
It found that more people bought in central Bedfordshire with the aid of the leg-up than anywhere else in the UK.
The scheme has helped 1,241 first-time buyers get onto the ladder in the area, though at £14,909 the average deposit was still relatively high even with a 20 per cent deposit bump from the government.
A cheaper prospect is on offer for buyers living further north, who had to save an average of £6,897 to buy using the scheme in Ashfield, Nottingham, where the average house price is now £137,943.
Islington, Labour leader Jeremy Corbyn’s home borough, was the most expensive in the UK identified for Help to Buy.
There were just 43 buyers helped by the Help to Buy equity loan scheme and each of them needing an average deposit of £40,393. The average house price in the borough now stands at £807,861.
|RANKING||LOCATION||AVERAGE HOUSE PRICE||AVERAGE HELP TO BUY DEPOSIT|
|3||Cheshire West and Chester||£254,616||£12,731|
|7||North West Leicestershire||£198,724||£9,936|
|Source: Totally Money|
How Help to Buy works
Help to Buy is a government scheme offering both first-time and repeat buyers an equity loan of up to 20 per cent to help them buy a new build property.
In London, the equity loan is available up to 40 per cent of the value of the property.
This means that buyers outside London must put in a 5 per cent deposit, secure a 75 per cent loan-to-value mortgage and the equity loan will make up the rest. In London, they can put in a 5 per cent deposit and secure a 55 per cent LTV mortgage.
This should make buying more affordable as the lower the loan-to-vale, the lower mortgage rates tend to be. Lower rates make your monthly repayments lower.
The catch is that after five years, you must start paying interest on the equity loan. Because it’s an equity loan, the government will also own a share of any uplift in the value of your property.
For example, if you take a 20 per cent equity loan to buy a home worth £100,000 and in five years you sell that home for £160,000 you will have to pay the government back their original loan of £20,000 PLUS 20 per cent of the £60,000 value increase – £12,000.
The best places to buy with Help to Buy
The research identified three of the best areas for those looking to use help to buy, which combined reasonable house prices and the number of equity loans used there – indicating a good supply of new homes.
You can find out how your area is ranked with the interactive map below.
Bedfordshire saw more buyers benefit from Help to Buy than anywhere else in the UK
This area sits between Milton Keynes, Bedford and Cambridge with plenty of good transport links into central London.
The average house price is £298,183 meaning those buying through Help to Buy must save £14,909 for their deposit.
Following the recent changes to stamp duty, those buying in this area for the first time will also find they don’t have any stamp duty to pay.
Cottages in Coppice, a tiny hamlet close to the market town of Chorley in Lancashire
The Lancashire market town came in second position with a relatively low average property cost at £182,818.
The district also boasts the lowest average minimum deposit from the top five districts at £9,141 and a relatively high number of equity loans given out by the government per head.
Chester has a lively student population and good links to Liverpool
Cheshire West and Chester
The second area in the North West to appear among the top scoring districts, Cheshire West and Cheshire scored particularly highly in terms of the number of Help to Buy Isa property completions per head. It came out top in the whole of the UK, with 495 residents purchasing homes after using this scheme.
The average house price in the area is £254,616 making a 5 per cent deposit £12,731.
Totally Money’s Joe Gardiner said: ‘Today, getting on the property ladder is increasingly being seen as a pipe dream for many young people.
‘But with the introduction of government Help to Buy schemes, this dream can become a realistic option. For those thinking of using these schemes, knowing where in the UK is the most Help to Buy friendly, and whether your local area is one of these hotspots, is of particular importance to allow buyers to make a responsible financial decision.’
To see where the area you want to buy is ranked, use Totally Money’s interactive map here and below.