Most people using the government’s Help to Buy scheme could already afford a home, report finds

13 June 2019

More than half the people using the Help to Buy scheme could have been able to purchase a home anyway, according to a new report from the National Audit Office (NAO).

It found that three-fifths of buyers would have been able to buy a home without the support of the scheme.

The Help to Buy scheme was launched in 2013 by the former Chancellor George Osborne with the intention of helping more people get on the property ladder.

According to the Department’s research, only 37% of households would not have been able to buy any property without the scheme, meaning the additional sale of just 78,000 new-build homes.

The report also revealed that one in 25 buyers taking part in the scheme had a household income above £100,000.

The scheme has also helped to boost the profits of property developers, the NAO says.

Five developers – Redrow, Taylor Wimpey, Persimmon, Barratt and Bellway accounted for just over half of all Help to Buy sales.

How does Help to Buy work?

Help to Buy is a government-backed initiative designed to help people buy a property worth up to £250,000 or £450,000 in London.

Introduced in 2013, it is available to first-time buyers and existing home owners looking to move up a rung on the property ladder with a deposit as low as 5% through an equity loan.

With the scheme, you can borrow up to 20% of the purchase price of a new-build home, or 40% in London. You won’t be charged fees on the loan for the first five years of owning your home.

Following its success, the government launched the Help to Buy Isa in December 2015 to help first-time buyers get together a deposit.

The Help to Buy Isa offers bonuses of up to £3,000 to people saving for their first home, is set to close on 30 November.

They give first-time buyers the opportunity to save up to £200 a month with the government topping up their contributions by 25%, up to a maximum of £3,000.


Gareth Davies, the head of the NAO, warns that scheme has exposed the government to “significant” market risk if property values fall.

Mr Davies says: “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.”

He says the government now faces a challenge to wean the property market off the scheme with as little impact as possible on its plan to build 300,000 homes a year from the mid-2020s.

The housing initiative has made around 211,000 loans amounting to £11.7 billion since its launch. Around 38% of all new-build property sales have been supported by loans, equivalent to 4% of all housing purchases.

When the scheme ends in 2023, the net amount loaned by the government is predicted to peak at around £25 billion, with this investment expected to be recovered by 2031-32.

Mr Davies adds: “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.” 

Around 81% of all buyers supported by the scheme have been first-time buyers. 

It was announced in 2018 that from April 2021 only first-time buyers would be able to use the scheme.

Kit Malthouse, the housing minister, says: “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 15%, and is set to make a profit for the public: it’s been a win-win.”

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