Government’s Help to Buy scheme ‘benefiting homebuyers who don't need help’

£22bn scheme has exposed the government to significant risk and has tied up significant public financial capacity says NAO


Then-chancellor George Osborne lays a block during a visit to a Barratt Homes building site in Nuneaton in 2014 Photo PA

The government has been accused of presiding over "fundamental" flaws in a key housing scheme, as the public spending watchdog found that many of those who benefited from Help to Buy could have bought a home without it.

Help to Buy was launched by then-chancellor George Osborne in 2013 in a bid to boost home ownership and housing supply by making it easier for people to get mortgages.

Under the scheme, which is administered by the Ministry of Housing, Communities & Local Government, home buyers receive a government loan of up to 20% of the market value of a new-build property. This is paid back when they sell the house on, or after 25 years.


But the scheme, which is set to run until March 2021 and has an expected maximum value of £22bn, is not means-tested and is currently open to both first-time buyers and people who have previously owned a home. £11.7bn has been loaned by December 2018.

A new report from the National Audit Office said the scheme had "increased home ownership and housing supply", with the government's own research saying 37% of households who used the scheme would not have been able to buy a home without it.

But the watchdog also found that "many of those using the scheme would have been able to buy a home anyway".

According to government figures, almost a third (31%) of all buyers "could have purchased a property they wanted without the scheme".

Meanwhile around 4% of those who had used the scheme by December last year had household incomes of over £100,000, the NAO found.

Auditor general Gareth Davies said: "Help to Buy has increased home ownership and housing supply, particularly for first time buyers.

"However, a proportion of participants could have afforded to buy a home without the government’s help.

"The scheme has also exposed the government to significant market risk if property values fall, as well as tying up a significant public financial capacity."

The government is proposing a successor Help to Buy scheme that will run for two years to March 2023, but this will be will be restricted to first-time buyers and will introduce lower regional caps on the maximum property value

Davies added that the government’s greatest challenge in the scheme is now to “wean the property market off the scheme with as little impact as possible on its ambition of creating 300,000 homes a year from the mid-2020s”.

He added: "Until we can observe its longer-term effects on the property market and whether the department has recovered its substantial investment, we cannot say whether the scheme has delivered value for money."

MHCLG ‘must safeguard taxpayers’ money’

Public Accounts Committee chair Meg Hillier said the NAO report showed the Ministry of Housing needed to "safeguard its investment of taxpayers’ money" and urged ministers "to exercise caution in winding down the scheme if it is to minimise negative effects on the housing market".

Responding to the report, housing minister Kit Malthouse said: "Help to Buy has been genuinely life-changing for first-time buyers across the country, helping them secure their first step on the property ladder. Not only has it supported more than 170,000 first-time buyers, it has increased home building by nearly 15pc, and is set to make a profit for the public: it’s been a win-win."

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