Since its launch in April 2013 up until December 2018, 211,000 loans with a value of £11.7bn had been lent to homeowners via the Help-to-Buy scheme, according to figures published by the National Audit Office (NAO).

In its latest Help to Buy: Equity Loan scheme – progress review, the office revealed that between April 2013 and September 2018. 38 per cent of all new-build property sales have been supported by loans through the scheme, accounting for around 4 per cent of all house purchases during this period.

According to independent research from the department, 37 per cent 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 per cent of all buyers supported by the scheme have been first-time buyers (FTBs).

Furthermore, the data found that around 4 per cent of the 211,000 buyers who had used the scheme by December 2018 had household incomes over £100,000.

However, the number of buyers taking advantage of the scheme in less affordable areas was low. In order to combat this, particularly in London, the government increased the maximum loan in the region to 40 per cent of the property value. This improved London take-up from 12 per cent, between the start of the scheme and December 2015, to 26 per cent of all new-build sales.

Looking ahead to 2023, the NAO has forecast that the net amount loaned through the scheme will peak at around £25bn in cash terms.

Despite this, it noted that there is “less and less need” for the scheme now that higher loan-to-value mortgages are more available, with the department planned to close the scheme in 2023. However, a new scheme is due to be introduced in April 2021 for FTBs, due to concerns across the housing sector that the end of the scheme will result in a drop in new developments and sales.

Commenting, NAO head Gareth Davies said: “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. The scheme has also exposed the government to significant market risk if property values fall, as well as tying up a significant public financial capacity.

“The government’s greatest challenge now is to wean the property market off the scheme with as little impact as possible on its ambition of creating 300,000 homes a year from the mid-2020s. 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.”

Share Story: