By Elizabeth Crouch Head of Residential Conveyancing
The value of the government’s Help to Buy scheme has been called into question by MPs on the Public Accounts Committee. They say much of the money invested could have been better spent elsewhere.
The Help to Buy: Equity Loan scheme was introduced in April 2013 by the Ministry of Housing, Communities & Local Government (the Department) to address a fall in property sales following the financial crash of 2008 and the consequent tightening of regulations over the availability of mortgages.
It was originally intended to last three years, but in 2015 it was extended to 2021.
The scheme has two principal aims: to help prospective homeowners obtain mortgages and buy new-build properties; and, through the increased demand for new-build properties, to increase the rate of house building in England.
However, the committee’s report is critical of how the money is being spent, saying that the scheme, originally intended to be short-lived will now last for 10 years and consume over eight times its original budget, yet the value achieved from its extension is uncertain.
The report says: “Around three-fifths of buyers who took part in the scheme did not need its support to buy a property, and the large sums of money tied up could have been spent in different ways to address a wider set of housing priorities and focus more on those most in need.”
“The Department acknowledges that the scheme has, however, only benefitted one section of society—those that are in a position to buy their own home in the first place.
“Inherent uncertainty in the housing market means there are still risks to the Department achieving a positive return on its investment in homes. The new scheme from 2021 provides an opportunity to target the money more effectively, but the Department has not yet fully thought out how it will do this.
“Unless the Department plans alternative housing initiatives, the end of the scheme in 2023 may lead to a fall in supply, adding to the challenge it already faces in achieving its ambition of 300,000 homes a year from the mid-2020s.”
The committee recommends that the Department continues to monitor the performance of Help to Buy and report back by the end of December 2019, setting out how its different housing policies and initiatives work together to address England’s housing crisis.
We shall keep clients informed of developments.
If you would like advice about the legal aspects of buying or selling a home, please contact Elizabeth on 01697 72378.