Editor's note: This brief was summarised by The Property AI Newsroom from a report by Guardian Property. Read the original article for full details.
Help to Buy delivered 'very high value for money', government review finds
A government review of the Help to Buy scheme has concluded that George Osborne's programme to reduce costs for first-time buyers represented "very high value for money". An official audit calculated that the scheme provided £25bn of social value to the UK in the last financial year, despite previous criticisms that it was overly expensive and only served to inflate house prices.
The findings are expected to bolster the case of senior government figures who have been arguing for Labour to resurrect the idea, including housing minister Matthew Pennycook, who has reportedly pushed behind the scenes for a new version to boost home ownership among young voters. Sources say Pennycook and the former housing secretary Steve Reed advocated strongly for such a move but were ultimately overridden by the chancellor, Rachel Reeves, who wanted to focus more on boosting housing supply.
What the review found
The report stated that the scheme supported expanded home ownership, particularly in already affordable areas. For some buyers, it helped them on to the housing ladder sooner or enabled them to buy when they might not otherwise have been able to afford to do so. For others, it supported them to skip a rung on the housing ladder and buy a larger or more expensive home. On this basis, the review concluded the scheme delivered its core aim of supporting home ownership.
More than 387,000 people bought their own home through the scheme, more than 328,000 of whom were first-time buyers. Nearly half of customers said they could not have bought a home without the scheme. The report did not take into account the effect on house prices, but it does rebut a central Treasury argument that the scheme was an expensive way to boost home ownership and expand the supply of new houses.
No current plans for a new scheme
A government spokesperson said there are no current plans to introduce a new Help to Buy scheme, but added that it is important to learn what went well and what went wrong with the previous scheme, which is why a detailed evaluation was undertaken, as is normal for all major programmes.
Ministers have so far focused on stimulating supply, pledging £39bn for new social and affordable homes and undertaking significant planning reform to encourage housebuilders to start new projects. The prime minister has promised to oversee 1.5m new homes over the course of this parliament, although the housing secretary admitted this weekend that would prove difficult to meet.
Background
The first iteration of Help to Buy was announced in 2013, offering taxpayer-backed loans to reduce the deposit buyers would need. A second version, launched in 2021, covered part of any losses lenders made on mortgages with a high loan-to-value ratio. Both applied to homes worth up to £600,000, and by 2014-15 they supported about a fifth of first-time buyer purchases. The schemes were popular but were criticised by some for helping those who would have got on the housing ladder anyway and contributing to soaring house prices.
For letting agents and inventory clerks, the review's findings may signal renewed policy debate around demand-side support for first-time buyers, even though the government insists there are no current plans for a new scheme.
Source: Guardian Property