MPs on the Public Accounts Committee have questioned the value of the government’s Help to Buy scheme. They have stated that money invested into the system, could have been spent elsewhere.
Ministry of Housing, Communities & Local Government (the Department) introduced the Help to Buy: Equity Loan scheme in April 2013 due to the decrease in property sales, after the finical crisis of 2008. This tightened regulations across the industry and reduced the number of mortgages available.
It scheme was only intended to last three years, but in 2015 it was extended to 2021.
The two principle aims of the scheme were: to help prospective homeowners obtain mortgages and buy new-build properties. This in turn would increase demand for new build properties therefore increasing the rate of new house being built in England.
The scheme was meant to be a short lived and has now lasted 10 years. It has also cost over 8 times its original budget. The committee has been critical in its report about the spending so far, and the return value of the extension being uncertain.
The report says: “Around three-fifths of buyers who took part in the scheme did not need its support to buy a property, and the large sums of money tied up could have been spent in different ways to address a wider set of housing priorities and focus more on those most in need.”
“The Department acknowledges that the scheme has, however, only benefitted one section of society—those that are in a position to buy their own home in the first place.
“Inherent uncertainty in the housing market means there are still risks to the Department achieving a positive return on its investment in homes. The new scheme from 2021 provides an opportunity to target the money more effectively, but the Department has not yet fully thought out how it will do this.
“Unless the Department plans alternative housing initiatives, the end of the scheme in 2023 may lead to a fall in supply, adding to the challenge it already faces in achieving its ambition of 300,000 homes a year from the mid-2020s.”
The Department has been advised by the Committee that they continue to monitor the performance of the schemes and are due to report back by December 2019. There may be new policies and initiatives that that con work together to deal with the housing crisis in the England.
If there any new developments, we will let our clients know.
Please contact us if you would like advice about the legal aspects of buying or selling a home.