HBF urges the government to launch a replacement for closed Help to Buy

The Help to Buy scheme has delivered a £900m return on investment to the Exchequer so far, and is expected to generate £2bn in profit for the government once all loans are repaid along with accrued interest, according to the Home Builders Federation.

Using government data, the new report, titled Road to Redemption, found that across 154,275 loans that have been fully repaid by homeowners, the government had received an uplift on the original loan value of around 9%. This represents a ‘profit’ of £718m with a further £229m in interest accrued to date.

Launched by the Conservative-Liberal Democrat coalition government in 2013, the scheme helped first-time buyers to obtain equity loans of up to 40% of a new build property’s value in London (from 2016 onwards) and up to 20% outside of London.

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This allowed buyers to provide just a 5% deposit and secure a mortgage for the remaining amount. The scheme also offered a shared ownership option.

Help to Buy (HtB) has supported almost 400,000 buyers to purchase a new-build home. With the discontinuation of HtB, the HBF has flagged that there will be no government assistance for buyers for the first time in 60 years.

The HBF has called on the government to replace the ‘void’ left by HtB by launching a targeted equity loan scheme supported by developer contributions that would enable buyers to access affordable mortgages with only 5% deposits.

The trade body has pointed out that policy interventions to help first-time buyers onto the property ladder have been a feature of the policy landscape since the 1960s, with tax relief on mortgage payments introduced from 1967.

Neil Jefferson CEO at HBF, said: “The new government has recognised the importance of addressing the ever-worsening housing crisis.

“The early work of ministers to reform the planning system provides the foundation for an increase in housing supply, but housing market conditions and mortgage terms continue to work against first-time buyers imposing a limit on what can be achieved.

“If government is to achieve its housing ambitions it needs to consider what targeted support it can provide to help buyers onto the housing ladder.”

Jefferson added that the Help to Buy scheme supported “the fastest increase in housing delivery on record and the positive returns it is now generating for taxpayers shows that intervening to support first-time buyers, as governments have done for decades, can have widespread social and economic benefits.”