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Who is Help to Buy helping?

MPs query ‘uncertain value’

MPs have expressed uncertainty over the value of the Help to Buy scheme in both its current and soon-to-be reformed version. A report by the House of Commons committee of public accounts warns that while the scheme has helped buyers on to the property ladder, a “large proportion” did not require financial help.

The report said: “While Help to Buy has helped many people to buy properties who otherwise would not have been able to, a large proportion of those who took part did not need its help. “By December 2018, the scheme had supported some 211,000 households to buy properties, through loans totalling £11.7bn. Some 37% of buyers said they could not have bought a property at all without the support of the scheme.

This implies that around three-fifths of buyers did not need the support of the scheme to buy a property, although some research suggests that even those who could afford to buy were not doing so because of wider economic uncertainty. Around 20% of people who have used the scheme were not first-time buyers.”

The committee warns that the Government has allowed the scheme to be a “semi-permanent feature” of the housing market since its launch in 2013, highlighting that there are no plans to address a fall in supply when the scheme is due to end in 2023.

The report also questions reforms to the scheme. From 2021, the ministry will restrict the scheme to first-time buyers, and is introducing lower regional price caps that will reduce the number of purchases through the scheme and should better focus the scheme on those who most need help. There are also warnings that borrowers may be unaware of the extra interest charged on the equity loan after five years.

Help to Buy, as the department acknowledged, only benefits those in a position to buy their own house in the first place. It does not help make homes more affordable nor address other pressing housing problems in the sector such as the planning system or homelessness. The scheme exposes both the Government and consumers to significant financial risks were house prices or interest rates to change. Better consumer protection needs to be built into similar schemes in the future

Readers can draw their own conclusions to this information provided on ‘Property Industry Eye’ this week but here is just one of many critical responses from its readership -

“More worrying is the price people are paying for the property when using this ponzi scheme. As usual only new home builders benefitting. People getting 20% discounts but still paying 20% more than a second hand property in the same area.”

We at Wilsons, and countless other critics, entirely agree.

By Chris Willey

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