Help To Buy - will it continue? (and does it deserve to?)

Is Help To Buy going to remain in existence for much longer?

Question marks over the scheme’s future are being raised through a number of quarters with the government as yet declining to say whether it will reform, scrap or replace HTB.

Nationwide estimates that in the last decade over a million would-be homeowners have been unable to buy a home of their own because of difficulties obtaining a mortgage or saving for a deposit. “Without Help to Buy, the number would be larger still” says the lender.

It wants three actions to address what it calls “the structural problems in the housing market” - these are an extension of Help To Buy beyond its current deadline of 2021, more borrowing opportunities for younger people to be explored by lenders and regulators, and more to be done to address supply issues for new homes.

Joe Garner, chief executive of Nationwide, says: “There are achievable steps we can take to rebalance the housing market and put home ownership within reach of young adults today. Given the housing market’s reliance on Help to Buy, and the fact that its sharp withdrawal would put further stress on first time buyers, I’d urge the government to extend the scheme beyond 2021."

However, research by Reallymoving - based on data about 70,000 of its clients - suggests that first time buyers using the scheme are paying on average eight per cent more than those buying new homes without Help to Buy. It says without Help to Buy the average is £257,908 compared to £277,968 paid by those who use the scheme.

New homes already command a 16 per cent premium compared to second hand properties, in addition to that HTB premium, the company claims. 

Rob Houghton, Reallymoving’s chief executive, says: “The Help to Buy scheme has provided a leg up onto the housing ladder for many first time buyers but this data suggests that first time buyers may not be getting such a good deal after all. When they come to sell this could increase the risk that their home isn’t worth what they paid for it.”

Meanwhile the Intermediary Mortgage Lenders Association - which represents 43 UK banks, building societies and specialist lenders - says it, too,  wants clarity around the future of the scheme. 

IMLA notes that the equity loan element of Help To Buy has, in its words “been a major contributor to restoring UK-wide FTB lending to pre-crisis levels with UK FTB mortgage approvals up more than a third since the scheme began.”

But Kate Davies, executive director at IMLA, says: “We are concerned that funding for HTB is due to be withdrawn in 2021, and that there has as yet been no clear signal as to what, if anything, might replace it. Given its success - and its importance in boosting both home ownership and housing supply - we believe that some form of government support should continue.

“Lenders and borrowers place heavy reliance on the scheme, and a major step-change to arrangements would risk significant market disruption and potentially undermine the government’s ambitious targets for new housing supply.

“If changes to the scheme are being proposed, lenders will need appropriate notice in order to plan ahead and deliver positive outcomes – hence our wish to have clarity as soon as possible on the government’s intentions.”