Would-be homeowners 'scheming' in the dark
Nearly half of Brits are unaware of schemes aimed at helping first-time buyers get onto the property ladder¹
Majority (58%) think home ownership schemes are too complicated²
With just days to go until the Help to Buy ISA ends³, Trussle highlights the confusion around the home ownership schemes available and helps would-be buyers in England, Scotland, Wales and Northern Ireland with a first-to-market home ownership tool
London, November 2019: Almost half of adults in the UK (47%) are unaware that there are schemes to help first-time buyers get onto the housing ladder¹, according to new research from online mortgage broker, Trussle.
The national study surveyed 2,001 people across the UK and found that there’s widespread confusion over the Help to Buy ISA, Help to Buy Equity Loan and Shared Ownership schemes.
While 53% of people were aware of the home ownership schemes available, 47% were completely unable to identify them¹. In fact, just one-in-five people across the UK were able to correctly name at least one of the three main schemes⁴.
Overall, nearly two-thirds (58%) of people believe home ownership schemes are too complicated to understand³ and among 18-34-year olds, this figure rises to 64%⁴. Worryingly, just 8% of people thought that the schemes were easy to understand⁵.
With prospective buyers in mind, Trussle has designed a tool to help savers understand all of the available home ownership schemes. The simple and quick questionnaire confirms eligibility and offers guidance on the criteria needed for each:
Myth busting three of the most popular schemes in turn, Trussle has identified the key features of each, highlighting the aspects that people are struggling to understand the most:
The Help to Buy ISA
This scheme, which offers first-time buyers a free savings ‘top up’ to help boost any potential deposit for a home, closes to new applicants on the 30th of November 2019³.
It’s only available to first-time buyers - but just two in five (43%) are aware of this⁶, and only 17% know that you can qualify from 16 years old⁷.
The Help to Buy Equity Loan
As part of this scheme, would-be buyers only require a 5% cash deposit, with the Government offering (a time limited) interest free loan worth up to 20% of the home's price outside of London. This means the would-be buyer needs just a 75% mortgage⁸. To reflect London’s top-end property prices, the Government loans participants 40% of the home’s value interest-free for five years.
Despite this offering, only 48% of the UK population know that a 5% cash deposit is required⁹, and crucially, fewer than a third (28%) are aware that properties can cost as much as £600,000 in London, to reflect the capital’s higher property prices¹⁰.
To date, more than 150,000 properties have been bought using this scheme¹¹. Any first-time buyers considering this scheme should be warned they will start racking up interest on the equity loan debt after 5 years, at 1.75%¹².
This option sees would-be homeowners buying a stake in a Shared Ownership home while paying rent and service charge on the part they don’t own. Run in conjunction with housing associations, it requires applicants to be at least 18 years old¹³. However, when it comes to household income, the knowledge gaps truly start to appear.
For the Shared Ownership scheme, household income must be less than £90,000 within London and £80,000 outside of London¹³. And yet, 68% of people think their household income must be less than £60,000 a year to qualify, regardless of location¹⁴.
Ishaan Malhi, CEO and founder of Trussle commented: “This research uncovers the scale of misunderstanding around the existing housing schemes designed to help first-time buyers onto the property ladder. Significant numbers of people feel locked out of homeownership and this lack of awareness around their options is simply making things worse.
“The truth is that the complexities around homeownership, including mortgages, present a wider industry problem around clarity.
“We’ve built a home ownership tool to help people try and navigate these schemes and find out which they could qualify for. We will shortly be introducing specialist teams of brokers to specifically manage applications via home ownership schemes too - but education for first-time buyers should be more widely accessible.
“If these schemes were simplified, prospective buyers would be more likely to understand the options available to them, more quickly. We want all first-time buyers to feel properly supported on their home ownership journey and maintain any momentum in today’s already tough market.”
– ENDS –
Notes to editors
For further information, please contact:
Katie Halfhead at Trussle: [email protected] / 020 3884 0368
Rupert Bhatia or Jess Riley at Teamspirit for Trussle: [email protected] / 020 7861 3827
We’ve taken extra care to ensure the information provided within this release is presented in a way that’s compliant with regulatory requirements. If you have any questions about how to repurpose this information or require any further assistance, please contact Katie Halfhead at Trussle.
Trussle commissioned a nationally representative UK survey of 2,001 UK adults (18+) with research agency Opinium in November 2019.
1. Calculation: When asked ‘Are you aware of any governmental or non-governmental home ownership schemes aimed at helping first-time buyers get on the housing ladder’
944 respondents answered no.
944 = 47% of 2,001
1057 respondents answered yes
1057 = 53% of 2,001
2. Calculation: When asked ‘To what extent do you agree or disagree with the following statements about home ownership schemes – ‘They are too complicated to understand’.
1165 responded either ‘Strongly Agree’ or ‘Slightly Agree.’
1165 = 58% of 2,001
3. Source: https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/ 4. Calculation: Of the 1057 respondents who answered ‘yes’ as above, 401 were able to recall at least one of: ‘Help To Buy’ ‘Help To Buy ISA’, ‘Help To Buy Equity Loan’ or ‘Shared Ownership.’ These were also filtered to include misspellings.
401 of 2,001 total respondents = 20% or one-in-five
5. Calculation: When asked ‘To what extent do you agree or disagree with the following statements about home ownership schemes – ‘They are too complicated to understand’.
562 respondents were aged between 18-34
357 respondents responded either ‘Strongly Agree’ or ‘Slightly Agree’
357 = 64% of 562
6. Calculation: When asked ‘Thinking about the ‘Help to Buy ISA, what do you think is the eligibility criteria?’
860 responded with ‘You must be a first time buyer to qualify for a Help to Buy ISA’
860 = 43% of 2,001
7. Calculation: When asked ‘Thinking about the ‘Help to Buy ISA, what do you think is the eligibility criteria?’
340 responded with ‘You must be at least 16 to qualify for a Help to Buy ISA.’
340 = 17% of 2,001
8. Source: https://www.helptobuy.gov.uk/equity-loan/eligibility/ 9. Calculation: When asked ‘The government offers a ‘Help to Buy equity loan’ to help first time buyers purchase a home. Thinking about the ‘Help to Buy equity loan, what do you think are the eligibility criteria?’
954 respondents answered, ‘This requires a deposit of 5% of the property price to qualify for a Help to Buy Equity Loan’.
954 = 48% of 2,001
10. Calculation: When asked ‘The government offers a ‘Help to Buy equity loan’ to help first time buyers purchase a home. Thinking about the ‘Help to Buy equity loan, what do you think are the eligibility criteria?’
562 respondents answered, ‘The Help to Buy Equity Loan is only applicable to properties worth up to £600,000 in London’.
562 = 28% of 2,001
13. Source: https://lqhomes.com/shared-ownership-eligibility-criteria/ 14. Calculation: When asked ‘Thinking about the ‘Shared Ownership’ scheme, what do you think would be the eligibility criteria?’
1352 respondents answered, ‘For Shared Ownership, you must have annual household income of less than £60,000’.
1352 = 68% of 2,001
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