The controversial Help to Buy Scheme has been shelved by the government.
One of the government’s flagship home ownership schemes came to an end at the weekend after divided opinions and varied successes. It is estimated that over the course of its lifetime, Help to Buy has helped over 100,000 individuals and couples to get on to the housing ladder. The Council of Mortgage lenders has said that the scheme has worked “exceptionally well”, however there are some that disagree.
Pushing Up House Prices
The housing advice association Shelter has argued that Help to Buy has contributed to increasing house prices. Under the programme, those borrowing were able to secure a mortgage with a deposit of just 5% and if borrowers were unable to honour their mortgage payments, the government compensated the lender. It is unclear how much money the Treasury will ultimately have had to pay out on Help to Buy as there could be an increase in mortgage defaults when interest rates rise. However, so far just £17,000 has been spent on compensation. The final figure will be calculated at the end of June 2024.
First Time Buyers Outpriced
The Help to Buy price cap also meant that many people were priced out of buying:
“The average asking prices exceed the Help to Buy cap in 67% of areas in the South East, 65% in London, 61% in the South and 53% in the East”
The Help-to-Buy Equity Loan scheme is available only on new build houses, and will remain in place in England until 2020. More information on the end of Help to Buy can be found on the BBC website.