Helping to buy

The Help to Buy Scheme1 has increased home ownership and housing supply. However, many of those using the scheme would have been able to buy a home anyway, according to a report by the National Audit Office (NAO).

The scheme was in April 2013 to increase both home ownership and boost housing supply, by helping people to get mortgages and thereby, create more new-build homes. The scheme is the largest housing initiative by value and, by December 2018, it had made around 211,000 loans amounting to £11.7 billion. Between the start of the scheme in April 2013 and September 2018, 38% of all new-build property sales have been supported by loans through the scheme, which is around 4% of all housing purchases during this time.

According to the Department’s own independent research, 37% of households would not have been able to buy any property without the scheme. The NAO estimates this has resulted in around 78,000 additional sales of new-build homes as of December 2018. Around 81% of all buyers supported by the scheme have been first-time buyers. The Department’s independent research also found that around three-fifths of buyers could have bought a property without the support of Help to Buy, but not necessarily a property they wanted. Almost a third of all buyers (65,000 households) could have purchased a property they wanted without the scheme.

Around 4% of the 211,000 buyers who had used the scheme by December 2018 had household incomes over £100,000. In the Department’s opinion these transactions are an acceptable consequence of designing the scheme to be widely available. Take-up has been low in less affordable areas where the ratio of house prices to average earnings is higher.  To address the initial low London take-up, the government increased the maximum loan in the region to 40% of the property value. This improved London take-up from 12%, between the start of the scheme and December 2015, to 26% of new-build sales, between January 2016 and September 2018, but it is still lower than the rest of England (46% of new-build sales over the same period).