The Welsh Government’s Help to Buy Wales equity loan scheme has supported more than 14,000 households to buy a home and generated a return of more than £40 million.
The scheme has now been in operation for ten years, with a decision by the Welsh Government on the future of the scheme after March 2025 imminent.
A new report, ‘Securing Futures: The Success and Impact of Help to Buy Wales’, suggests that the scheme has seen homeowners repay their Welsh Government equity loans with an average uplift of 18% when compared to the original loan value. The return is expected to rise further as more homeowners pay back their loans to the Welsh Government in the years to come.
The research, conducted by the Home Builders Federation (HBF), reveals that 46% of all loans have been repaid in full at a total value of £281.99 million, compared to an original value of £239.79 million. This is a return of over £40 million to the Welsh Government and an average uplift of 18% per equity loan.
The average equity loan since 2013 has been £40,000, meaning equity loans have generated a ‘profit’ to the taxpayer of £6,500 on average.
The Help to Buy Wales scheme operates by providing a shared equity loan of up to 20% of the purchase price to buyers of new-build homes. Buyers must provide a minimum 5% deposit, and a repayment mortgage covers the remaining amount.
The shared equity loan is interest-free for the first five years and must be repaid within 25 years. When repaying the equity loan, the homeowner repays proportionate to the current price.
An equivalent scheme was scrapped in England in 2023. HBF says this decision removed support from younger generations trying to get onto the housing ladder despite high interest rates, limited mortgage availability and weak consumer confidence. This marked the first time in 25 years that there hasn’t been a government scheme in place in England to help first-time buyers onto the property ladder.
The report also details the support provided to low and middle-income households by the Help to Buy Wales scheme. 64% of households had an overall income of £40,000 or less, while 53% of households who have used the scheme bought a house under £200,000.
The scheme has also delivered a wide range of benefits in the ten years since its introduction, says HBF, supporting thousands of jobs, delivering benefits for local communities, and providing low-carbon and energy efficient new homes. On average, the scheme has supported 4,400 jobs, generated £240 million in economic activity and led to investment of £420,000 in open spaces every year.
Neil Jefferson, Chief Executive at HBF said:
“The Help to Buy Wales scheme has been a key driver in getting first-time buyers onto the property ladder, turning the dream of home ownership into reality, and increasing the supply of new build homes.
“This report also shows that it has delivered for the taxpayer, generating significant returns to the Welsh Government. With the economic climate presenting challenges for both first-time buyers and the industry, it is vital that support for prospective buyers remains in place after March 2025, when Help to Buy Wales is due to expire.”
