Help to Buy scheme ends after funding new homes worth £110bn

The Help to Buy scheme aided the purchase of almost 390,000 new build homes worth £110bn to the housebuilding industry, according to official figures out today following the scheme’s closure in March.

The data from the Department for Levelling Up Housing and Communities (DLUHC) showed that a further 3,202 homes were purchased using the equity loan scheme in the first three months of the year, prior to it closing on March 31, exactly 10 years after being set up by then chancellor George Osborne.

The data showed that 387,091 homes have been bought using Help to Buy’s equity loan scheme, under which buyers benefit from a government loan worth 20% of the value of the house to use effectively as a deposit, which is then taken back when the house is sold on.

The scheme has seen £24.7bn worth of government loans advanced to support home buyers, allowing sales of houses worth £109.2bn to go ahead. Just under 85% of homes sold under the scheme have gone to first time buyers, however critics have accused the scheme of propping up the profits of major housebuilders without requiring quality improvements from them.

The department has allowed housebuilders subject to severe build delays to apply to complete the last purchases up to May 31, so these figures will be a few additional further completions – but the scheme itself closed on March 31.

>> See also Help to Buy: It’s the end of an era

The data comes amid speculation the government is considering bringing in a new version of Help to Buy amid growing concern over the health of the industry in the wake of the housing market downturn prompted by high interest rates and the cost-of-living crisis.

Last week the UK’s largest housebuilder Barratt said the number of first-time buyers acquiring its homes had fallen by 49% in the last year as Help to Buy wound down, and is now predicting a drop of up to 23% in build volume over the next 12 months.

The 3,202 homes purchased using Help to Buy in the last quarter of the scheme operating was a 41% decline on the same period a year ago, representing a continuing trend of decline in use of the product since tighter rules were introduced restricting its use in 2021. The figures come after DLUHC last week admitted it had handed back £1.2bn of funding allocated to Help to Buy back to the Treasury unspent because of the difficulty of getting schemes built.

Steve Turner, director at the Home Builders Federation, said Help to Buy had assisted a third of a million people access quality, energy efficient homes, which had  underpinned demand and “allowed the industry to double housing supply”.

He said: “Builders can only build if buyers can buy and its withdrawal marks the first time in decades there is no Government scheme in place to support first-time buyers. Allied to the wider anti development policy approach of ministers, its withdrawal poses a significant threat to housing supply, frustrating the ambitions of young people, costing jobs and reducing GDP.”