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More new homes being built thanks to Help to Buy

More new homes being built thanks to Help to Buy

Category: Mortgages

Updated: 21/02/2014
First Published: 21/02/2014

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

With the country crying out for new homes – particularly with house prices only ever seeming to be on the rise – it's encouraging to see that more new homes are being built. Housing statistics from the Department for Communities and Local Government (DCLG) reveal that the number of new homes being built in 2013 was the highest for six years, meaning it could be a great time to secure that mortgage and get your foot on the housing ladder.

The figures

The data shows that 122,590 new homes were started last year, an increase of 23% on the previous year's figures and the largest number recorded since 2007, before the financial crisis took hold. Around 13,000 of those homes have so far been bought under the Help to Buy equity loan scheme, with it arguably being this that's continuing the rise in construction projects.

Overall the figures paint a positive picture for the housing market as it means we could start to see the supply of homes start to balance out with demand, ideally constraining any excessive price rises, as Sylvia Waycot, editor of Moneyfacts.co.uk, said: "It's great to hear that new builds are on the rise as it removes some of the fear of a so-called 'housing bubble', where prices soar because there are not enough houses on the market to satisfy demand."

Make the most of new homes

With all these new homes being built it could be a great time to take advantage and get on the housing ladder. Buying a brand new home has numerous advantages – it'll be under warranty/guarantee from the developer which means any issues will be quickly rectified, and if you buy off-plan (i.e. before the home's finished) you'll be able to have some input in the final design, determining everything from the type of bathroom you want to the kitchen fittings and even the window style, meaning it can be built around you. Why not check out the best mortgage deals and see if you can fund your new home?

Why is Help to Buy fuelling house building?

Arguably, the rise in new homes being built is a result of the Help to Buy scheme fuelling the market and encouraging house builders to start developing again. The scheme was launched in April last year, with the first phase – the equity loan portion – only being available to those buying new properties.

Under the scheme, the homebuyer needs to put down a minimum deposit of 5% with 20% of the home's value provided in the form of a Government equity loan, essentially meaning the buyer only has to find a 75% mortgage. It's available to all types of buyer with the caveat being that it's only new homes that qualify – which meant more new homes needed to be built in order to accommodate.

More needs to be done

It's great to see the market starting to recover, and the figures are a welcome sign of growth in the housing industry. However, there are concerns that more needs to be done – even though the number of new homes being built has enjoyed a significant surge, it's still a long way short of the 250,000 homes experts suggest are needed to be built each year. Meanwhile the number of completions actually fell by 5% on the previous year – down to 109,370, the lowest figure since 2010.

Positive signs?

Despite these fears, it can't be denied that it's a good place to start with more new homes being built only being a good thing. There are hopes of more positive figures to come, particularly in terms of completions – house building is a slow process, say industry experts, with a typical lag time of at least 12 months between initial start and completion, so the increased number of homes being started last year could lead to a significant jump in completions over the next few months.

A lot of the UK's building firms have also pledged to start more construction projects this year, so we could see an even bigger rise in the number of new homes being built. "This is just the start of what needs to be a massive building programme in order to satisfy the needs of everyone encouraged onto the housing ladder thanks to recently launched schemes such as Help to Buy," added Ms Waycot, and hopefully the market should see yet more new homes being built in order to satisfy that demand.

What Next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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