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As Help to Buy ends, where can first-time buyers turn in a cost-of-living crisis?

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As Help to Buy ends, where can first-time buyers turn in a cost-of-living crisis?

Since 2013, the Government’s Help to Buy scheme has helped more than 360,000 buyers.1 But this support has now ended, with applications for the equity loan programme having closed at 6 PM on 31 October 2022.

This is despite young or first-time buyers currently facing some of the toughest housing market conditions in decades, with house price growth far outpacing wage growth.

Unaffordable housing

In fact, the average UK house price in July 2022 was £293,324, versus £55,328 reported in the same month of 1992, equating to a 430 per cent inflation in the three decades since.

Contrast that with the 113 per cent growth seen in wages from 1992 to July 2022, and the difficulties young or first-time buyers face are obvious. Specifically, the average UK household income has grown to £31,876 in 2022, versus £14,937 in 1992.

As a resultthe average UK household’s annual income is now only equal to a little over 10 per cent of the average UK house price, down from almost 27 per cent 30 years prior. 

And with no extension to Help to Buy expected, and no known replacement initiative in the pipeline, it could mean hundreds of thousands of potential future buyers are left without the support they need.

What options do buyers now have?

There is, of course, still external support available. A lack of Stamp Duty in England and Northern Ireland, for example, will help some first-time buyers. And the recent changes to Stamp Duty will help others.

But given the average deposit needed from a single first-time buyer is almost £75,0002, a Stamp Duty saving of less than 1 per cent on the average priced house in July 2022 (£293,324) will have limited impact when compared to the Help to Buy package, which offered a five-year interest and repayment-free loan of up to 20 per cent of the purchase price.

It might, then, be worth considering the lifetime ISA, mortgage guarantee scheme or shared ownership as possible ways to boost the buying power of aspiring homeowners. However, not everyone falls within the criteria or has the funds readily available to take full advantage of those programmes.

So how else could a young or first-time buyer find the support they need to take their first step onto the property ladder? 

The Bank of Mum & Dad 

Homeownership opportunities will have seemed much more attainable in the 1990s than today, with house prices more in line with the average annual income.

But more than that, those who bought then are likely to have benefitted from the exponential house price growth we’ve seen over the last few decades.

This could mean they’re now sat on large amounts of wealth tied up in the value of their home. Reports state that over-55s have a collective property wealth of £4.4trillion in the UK.3  

So, rather than watching a loved trying to overcome the ever-widening gap between annual income and house prices, your clients could provide the support their family needs to make homeownership a reality – by accessing some of their own property’s value.


According to recent research conducted by Key Group, more than 1 in 4 over-45s plan to downsize in later life, with almost the same yet to make a decision.And from those, almost 10 per cent plan to do so to free up some extra cash in order to provide a financial gift to their loved ones.

However, research shows that only around 1 in 5 downsizing transactions end up with the householder in a cheaper property with fewer bedrooms.5 Meanwhile, a similar number, around 1 in 6, actually end up in a more expensive house with more bedrooms. And around a quarter are no better off than before, ending up in a similarly-priced home.

Alongside that, the cost of moving home is also underestimated. More than 7 out of 10 people either don’t know how much it costs to move home or believe moving home will cost less than £10,000.4 But according to Which?, the average cost to move home in October 2021 was almost £12,000.6

That means those who choose to downsize to support their loved ones may not only end up failing to secure a cheaper property, but will also likely face higher-than-expected costs which will reduce any financial benefit of moving.

Equity release could provide a solution

Another way parents or grandparents could help a loved one onto the property ladder is through equity release. 

Equity release allows homeowners aged 55 or over access tax-free cash from their property without the hassle of moving home. And 1 in 5 customers who take out equity release do so to gift money to their family7 – including for house deposits.

With a lifetime mortgage – the most popular form of equity release – there are no mandatory monthly repayments. That means if your client is one of many whose later life finances have been tested through the current cost-of-living crisis, their monthly outgoings won’t be further stretched by equity release.  

Other benefits include interest rates fixed for life, ensuing protection against any further market volatility, full home ownership retention and no affordability criteria.

The importance of expert advice

But now, more than ever, it’s crucial that those in need of funds and those with the assets to unlock them receive expert advice to ensure the best customer outcome.

Air is the next generation, industry-leading later life lending platform which lives and breathes your growth as an adviser. Enabled by technology, knowledge and people, we offer financial professionals, from advisers to lenders, best-in-class digital sourcing tools, personal development services and incentives; all designed to support and reward your business growth, especially through this challenging time. 

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For more information, call our expert adviser support team who are on hand help you with your later life lending questions. Get in touch today on: 0800 294 5097

1 Gov.UK

2 Rightmove – Cited

3 ONS via City A.M.

4 KeyGroup Downsizing Research – 1,000 UK based homeowners (mortgaged or outright) aged 45+ 04.10.22 – 06.10.22

5 NHBC Foundation

6 Which?

7 Key’s Market Monitor H1 2022

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