One year ago the ‘help to buy’ initiative promised to help first-time buyers and encourage building. But after 12 months the scheme has had mixed fortunes with just four people in Brighton and Hove taking up the government equity scheme. Could a lack of new homes be the reason? In a special report Teresa Reiter analyses the circumstances in Sussex.

The technology boom, diverse cultural scene and relatively cheaper housing costs have made Brighton and Hove an increasingly attractive alternative to the capital.

Yet with an annual shortfall of 700 homes in Brighton and Hove, building enough to meet demand remains a sticky challenge.

One Government initiative meant to help buyers and stimulate building is ‘help to buy’, which offers a loan of up to 20% of the purchase price of a newlybuilt property for a 5% deposit.

Chancellor George Osborne announced the scheme would be extended, which was welcomed as good news for buyers and the housing market.

The equity loan element of the scheme which enables buyers to purchase a new build property worth up to £600,000 with a five-year, interest-free loan for up to 20% of the value of the property was introduced.

But it was not without its controversy and has been criticised for its similarity to the US sub-prime mortgages which triggered the global financial crash.

So far, help to buy has had mixed success, with little take-up in the city, but more in the county.

In Brighton and Hove, just four people have taken up the offer, while overall in Sussex the figure is 237.

Research by Savills has shown the difference between house prices in London and the South East has never been bigger, making Brighton and Hove increasingly popular for Londoners and stretching its already squeezed supply.

This has made home ownership an increasing challenge with help to buy failing to offer the magic solution.

Ana Watts, 39, a web designer from Brighton said it was not an option because if interest rates went up she would be unable to afford monthly mortgage payments.

She said: “My husband and I are both on decent incomes. We have been looking for a good house in our price range for more than two years, but the prices are just tremendous.

“I guess we just have to move out of the city to a more rural and less hip area to afford our own place. It is really unfair that normal people can't find a place to live here anymore. Most of us are not rich.”

Others in the industry say help to buy has had the opposite of its desired effect.

Developer Mike Holland, of Thornton Properties, said: “The scheme made the housing supply a lot shorter than before and I don't know whether it will help so many people in the long term. If anything it has pushed the prices.”

In neighbouring Worthing estate agent Michael Jones argued it had helped get the housing market back on track.

He said: “It seems to me that the market is now ticking really nicely and it will be interesting to see whether we will need the scheme until 2020. I don't think we will. The market seems to be stimulating itself now.”

For Connells in Haywards Heath the extension of help to buy in George Osborne’s budget was a cause for celebration.

The Mid Sussex district has recorded 59 help to buy sales.

Branch Manager Dean Hamshaw said: “Help to buy has been very popular with purchasers since it was launched last April so the decision to extend the scheme is positive news for the housing market.

“As well as helping first-time buyers, the scheme was instrumental for home movers, many of whom used it to move to a larger home which would fulfil their needs for a longer period rather than having to upsize again a fewyears down the line.

“We are advising buyers to take advantage the Help to Buy as soon as possible.

“With house prices continuing to rise, those who purchase now will benefit from increases in the value of their property in the months ahead.”

Connells said the scheme had been fundamental in boosting house-building in the area and was available on most of the new homes developments that Connells is selling.

Whatever its merits, house prices in Brighton are the third highest rising in the country behind London and Manchester.

Councillor Bill Randall, chair of Brighton and Hove’s housing committee, believes help to buy has failed to help those in need.

He said: “It should be restricted to first time buyers. Part of it should be set aside for council tenants wishing to buy a home.

“At the same time ‘right to buy’ should be ended, since it doesn't produce any new homes and reduces the pool of affordable housing for the many people in Brighton and Hove who will never be able to buy a home and find it difficult meeting the high rents in our city.”

Meanwhile Andy Winter, chief executive of the Brighton Housing Trust, called for radical measures to solve the supply issue.

He said: “We will only begin to address housing need if our top three priorities become supply, supply, supply.

“We will need to do some rather radical and controversial things, such as building on the Downs and in the National Park. I personally would favour building between Falmer and Woodingdean.”

The issue is set to come to a head with the council and government clashing over suitable building space.

The government has said in its National Planning Policy Framework that every piece of land should be up for grabs – making greenfield sites fair game.

Green edges of Brighton and Hove could be developed after the government ordered a re-think on the council's house-building allocation, contained in its City Plan.

Last week hundreds of protesters rallied against controversial plans to build on green fields on the edge of the South Downs National Park.

Developers want to build up to 100 houses between Ovingdean and Woodingdean, with plans expected to go to Brighton and Hove City Council within weeks. The proposals have caused uproar in neighbouring villages.

Councillor Phélim Mac Cafferty, chair of the planning committee, said: “This is a cause for huge concern for us as councillors, as much as it is for our communities.

“The Government-appointed inspector examined the city’s blueprint for local growth last year and said we needed to look under every stone for housing. We have been told we need to build 20,000 new homes.

“We are making the strongest case possible for protecting our urban fringe.

If and where housing will be allowed on our urban fringe will depend on what the Government Inspector accepts.”

Detractors of help to buy fear the scheme’s consequences could be longterm.

But as long as the lack of supply and rising prices are an issue, help to buy will continue to be an irrelevance for would-be buyers in Brighton and Hove.