Has The Help to Buy Equity Loan Scheme Been Successful?
The Government’s Help to Buy equity loan scheme has been hailed a success, given that it has enabled more than 170,000 households to purchase a home that they otherwise wouldn’t have been able to afford. However, although the scheme has led to a jump in housing supply, one in five people benefitting from the equity loan have used it to trade up the property ladder.
What is Help to Buy?
Help to Buy enables people to purchase a new-build home with just a 5% deposit, with the Government contributing an interest free equity loan of 20%.
Who has it helped?
According to the Home Builders Federation (HBF) the scheme has enabled over 170,000 households to buy a home, 81% of which were first time buyers. The scheme has resulted in a 74% jump in housing supply since it was launched five years ago.
The criticisms
However, even though it is deemed as successful overall, many people have felt that the scheme has wrongly been used by those already on the property ladder, with one in five people using the scheme who aren’t first-time buyers and 10% of those who have benefitted from the scheme having a household income of more than £80,000 a year.
There have also been complaints that the scheme has inflated house price growth, creating affordability issues for those not using the scheme to buy a home. In addition, Government figures suggest that 30% of all completions using the help to buy scheme have been for detached properties, while 15% of homes have been above the £350,000 threshold.
The future of Help to Buy
The Government is reported to be considering closing the scheme in three years’ time, when the funding is due to change. Alternatively, it may be changed to only benefit first time buyers.