Early government plans to bring back Help to Buy have been slammed by brokers as a recipe for inflating house prices and benefitting housebuilders.
Prime Minister Rishi Sunak’s government is looking at proposals to revive the scheme, ahead of the next election, according to The Times.
The scheme was launched by former Chancellor George Osborne in 2013, but was wound up in March. It offered first-time buyers a government equity loan of up to 40% of the purchase price on new-build homes, with no interest payable for five years.
The scheme was responsible for more than 375,654 loans, valued at £23.6bn over a decade.
New Help to Buy measures may be put forward in Chancellor Jeremy Hunt’s autumn statement, or in next year’s Budget.
The move comes after last week Labour shadow housing secretary Lisa Nandy, accused the government of abandoning first-time buyers as homeownership rates have fallen while mortgage costs have soared.
Many brokers say returning to Help to Buy is a backward step.
For Self-Employed SEMH founder Graham says: “This is a terrible idea. Floating Help to Buy again is a sure sign of which way the wind is blowing for house builders.
“They’re starting to struggle because borrowers can no longer afford to pay overinflated prices for what is often little more than a shoebox. This policy should really be called Help to Sell, because that’s exactly what it is.
“If Sunak really wants to help first-time buyers get on the property ladder, he should stop intervening and simply let house prices fall so they become truly affordable again.”
Property developer and portfolio landlord at The Kushman Group Kundan Bhaduri adds: “While Help to Buy has incentivised developers to build more homes, the scheme has also led to the construction of higher value homes, which does nothing to improve the supply of affordable homes for people on lower incomes.
“What we need is less bureaucracy and an objective planning regime to get small builders to build more homes up and down this country.”
Although some brokers welcomed the possible reintroduction of the scheme, they say it should only be used as part of a wider array of measures to boost housing supply and help affordability.
The Mortgage Stop operations director Rohit Kohli says: “Help to Buy supported thousands of people into their first home and it’s welcome news that it’s being considered again after being completely overlooked in the budget.
“However, this isn’t the painkiller to the first-time buyer headache — it has to be part of a wider range of solutions including looking at more innovative ways to help renters who pay thousands a year get through affordability hurdles.”
Another housing option the government is considering is extending its 95% mortgage guarantee scheme, due to end this year, which has underwritten £4.4bn in low-deposit home loans since it was launched in April 2021.