5. Help to Buy
Help to Buy is well known and appreciated by small developers
At the time of the survey there was less knowledge about the new schemes than the original schemes
Both the registration and the administrative stages were highly praised for their simplicity and ease of use and neither of these posed any obstacle to SMEs joining the scheme
For those who hadn't registered the main reason was that the scheme was not relevant, largely because the homes they developed did not fit the criteria
For those who had registered but hadn't sold the main stumbling block was difficulty getting the finance to get developments off the ground and further that there was no demand leading to suggestions for further marketing
Other suggestions for the scheme was that the prices should be relevant to locality and that the percentage of equity taken by the government could be larger
This chapter sets out the answer to the following research questions:
- What is the level and nature of the knowledge of small developers about the Help to Buy shared equity scheme (and other SG initiatives centred on building)?
- For HTB registered developers, what was the motivation for registration where no or few sales were made under the scheme?
- What is developers' experience of:
- the scheme
- the registration process and
- understanding the processes for managing and approving applications?
- What elements of the small developer support provided could change to enable greater participation through (a) registrations and (b) sales under the scheme?
We asked respondents if they had heard of any Help to Buy Scotland scheme, the results are set out in Table 5.1. Only one of the 65 respondents that answered the question had not heard of the scheme. Of the 64 that had heard of the scheme the majority (49) had registered. 31 (of those 49) had made sales under the scheme and 16 had not, one respondent had a sale pending and the other had applied to make sales under it but the application was not accepted.
We explored the findings by size of respondent. In the medium group 13 (of 14) had heard of the scheme and almost all (11) of them had made sales under it. In the small group all 51 that answered the question had heard of it, 14 (of 51) had not registered on it, 15 had registered and not made sales under it (20 had made sales under it). These results suggest that the smaller developers, although they knew about the scheme were less likely to make sales under it than the medium group.
Table 5.1: Knowledge of any Help to Buy (Scotland) scheme - all and small and medium
|Not heard of it||0||1||1|
|Heard of it but not registered on it||14||1||15|
|Registered with the scheme but no sales made under it||15||1||16|
|Registered and sales pending under the scheme||1||0||1|
|Registered and applied to make sales under it but application not accepted||1||0||1|
|Registered, and made sales under it||20||11||31|
Table 5.2 sets out the same findings by urban/rural split. The one respondent that had not heard of the schemes was in the rural group. The urban group (please see caveat concerning small numbers in Annex A) had the highest proportion of respondents that had registered (9 of 11) on it and made sales under it (7 of 9). The proportions that had registered in the rural group (28 of 36) and the semi-rural group (12 of 17) were roughly the same. Likewise for sales made, in the rural group 17 of 28 and the semi-rural group at 7 of 12.
Table 5.2: Knowledge of and registration on any Help to Buy (Scotland) Scheme - Rural, semi-rural, urban
|Not heard of it||1||0||0||1|
|Heard of it but not registered on it||8||5||2||15|
|Registered with the scheme but no sales made under it||9||5||2||16|
|Registered and sales pending under the scheme||1||0||0||1|
|Registered and applied to make sales under it but application not accepted||1||0||0||1|
|Registered, and made sales under it||17||7||7||31|
We asked the 31 respondents that made sales under Help to Buy, how many sales they made, 25 replied. The numbers ranged between one home sold and 60 sold. Eight sold five or fewer, four sold between 6 and 19, seven between 20 and 39 and six between 40 and 60.
Turning to the New Scottish Shared Equity for Developers Scheme ( LIFT), more respondents had not heard of this scheme (17 of the 64 that answered the question as opposed to the one that had not heard of Help to Buy) and far fewer had made sales under it (2 as opposed 31). A higher proportion of respondents from the medium sized group (as opposed the small group) had heard of the scheme, registered on it and both respondents who had sold under the scheme were in the medium sized group.
Table 5.3: Knowledge of and registration on New Scottish Shared Equity for Developers ( LIFT) - Small and Medium
|Not heard of it||15||2||17|
|Heard of it but not registered on it||32||9||41|
|Registered with the scheme but no sales made||3||1||4|
|Registered, and made sales under it||0||2||2|
Looking at any differences by geographical situation, the semi-rural group were proportionally more likely to have heard of the LIFT scheme than the other groups (15 of 17) and the rural group was more likely than the urban group (26 of 36 and 6 of 11 respectively). The two respondents that had made sales came from the rural and the semi-rural groups.
Table 5.4: Knowledge of and registration on New Scottish Shared Equity for Developers ( LIFT) - Rural, Semi-rural, Urban
|Not heard of||10||2||5||17|
|Heard of, not registered||24||13||4||41|
|Registered, no sales||1||1||2||4|
|Registered, made sales||1||1||0||2|
We asked the 15 respondents that had heard of Help to Buy but not registered on it which of the different schemes they had heard of. The results are set out in Table 5.5 which shows that of the 14 respondents that answered, 13 had heard of the original scheme, only 8 had heard of the original small developers scheme and even fewer had heard of the new schemes at 5 respondents each.
Table 5.5: Knowledge of and registration on separate Help to Buy schemes
||Heard of but not registered on Help to Buy: Base 14||Registered on Help to Buy: Base 48|
|Help to Buy (Scotland) - Original scheme||13||24|
|Help to Buy (Scotland) - Small developers scheme||8||35|
|Help to Buy (Scotland) - Affordable new build scheme (New main scheme)||5||6|
|Help to Buy (Scotland) - Small developers (new small developers scheme)||5||20|
Table 5.6 sets out the reasons respondents didn't register on Help to Buy. The main reason was that the homes they were delivering did not fit the criteria (6 of 15), three thought it looked too complicated to register (whilst the 49 that did register had not difficulties) and three others said it didn't seem relevant for their business.
Table 5.6: Main reason for not registering for Help to Buy
Looked too complicated to register
It didn't seem relevant for my business
Homes you were delivering did not fit with the criteria
I already have all the business I need or can cope with
Going back to Table 5.5. we asked the 49 respondents who had registered with Help to Buy which of the different schemes they had registered on. Forty-eight replied. Twenty-four registered on the original scheme, 35 on the original small developers scheme and only 6 on the new main scheme and 20 on the new small developers scheme. This means that at the time of the survey there was still some way to go to ensure all relevant developers knew about and registered on the 2016 schemes.
To explore how respondents found the Help to Buy processes we asked those that had registered if they had any difficulty finding out how to register for Help to Buy and all 49 said they did not. Further we asked how they found the process of registering and 29 said very straightforward and the remaining 20 said straightforward. Forty-five of these made further comments all very positive and included that they found it "quick", "simple", with "easy to follow instructions". Other words used about the process were : "streamlined", "very easy", "very clear", "easy to find", "easy to follow" and "efficient".
It is worth noting two other aspects that made the process straightforward for our respondents, one was the familiarisation session given by Homes for Scotland and the Help to Buy team and the other was the that the Help to Buy registration team were helpful and friendly.
The 16 respondents that registered for Help to Buy but didn't make any sales under it were asked the main reason for the lack of sales. Four of the 16 stated that they could not raise the finance for the development they intended to sell under the scheme. One respondent said "..we can't start our excavators without the funding that puts fuel in the tank".
Five had only recently registered and so did not have any building underway. Two had building underway and sales pending, for one the start of building had been delayed. Another key reason variously expressed was that no customers had "asked for it".
For the 31 respondents that had made sales under Help to Buy we asked them how they found the Agent's administration process. The 29 that answered the question all said straightforward (17) or very straightforward (12). When asked what made it straightforward 23 responded. The main reasons were either that the respondents had departments or employees that dealt with the agents or that their solicitor undertook the work. Those who did it themselves said that the processes were "simple", "well explained", "hassle free", that "the agent was knowledgeable" and that the "timetables were clear and stuck to". They praised the system as not only simple but also predictable.
When asked if there was anything we could do to make the registration process simpler 23 comments were received. Fourteen suggested to leave it as it is as it's already "fit for purpose". Other comments did not directly address the registration process, nevertheless they are reported here as suggestions for improvements.
One potential need was identified, and came as a warning that the team should be "resourced up to handle volumes" clearly thinking the scheme will become more and more popular. Another was a call for more equity to be available, or to "increase the percentage funded by government" one suggestion was to go from 20% to 30%. There was a concern that the criteria for accessing mortgages in the new schemes is different (less generous) than the previous schemes.
A further suggestion was that as housing markets had very different prices in different areas that different thresholds could be set, basing it around average house prices in the area.
Mostly respondents liked the scheme and wanted more of it.
One respondent said
".. (Making) the fund larger and increasing access across the price brackets …. may help continue to stimulate the market. This will become ever more relevant when the impact of BREXIT takes hold and the greater uncertainty impacts on banks willingness to lend. This will be a big issue for Scotland given its small population base which is very price elastic"