The report into the initiative, which is aimed at helping to make homes more affordable to buy, said that the department did not consider alternative ways to deliver objectives, despite Treasury guidance which says it is good practice to assess a range of options when introducing new policies.
Committee chair Margaret Hodge said: “This means [DCLG] has committed to spending up to £10bn on supporting Help to Buy without establishing whether it represents the most effective way of using taxpayers’ money to achieve its objectives.”
In future, the report recommends, the department should assess a range of alternative options and presenting this analysis in its business case.
The report also recommends that that departmental review of the scheme planned for 2015 should consider three areas: whether more people purchased properties than would have done without the Scheme; whether builders built more houses than they would have built otherwise; and what effect the Scheme could be having on house prices. It should also look at the impact on different regions, it said.
Help to Buy also creates a risk to the department by building a £10 billion portfolio of equity loans, according to the report.
Its report said that DCLG and Homes and Communities Agency must set out how they will protect the taxpayer and ensure they have the skills and capacity both to monitor and manage the loan portfolios in response to potential changing commercial circumstances.
Hodge said the ongoing monitoring “will create a heavy administrative burden for both organisations, potentially over decades”.
Housing Minister Kris Hopkins said the scheme could lead to an estimated economic benefits of "as much as £1.9billion".
"So," he added, "it is offering excellent value for money for taxpayers, and to suggest otherwise is simply absurd.
“Since the scheme’s launch, house building is up a third and now at its highest level since 2007. Over 27,000 people across the country have used Help to Buy to get on the property ladder with a fraction of the deposit they would normally require, with cities including Leeds, Durham and Manchester seeing some of the biggest numbers of sales.”