Help to Buy exposes government to ‘significant risk’

The Help to Buy initiative that provides homebuyers with equity deposits has exposed the government to market risk, according to a report from the National Audit Office. It said the £11.7bn invested was vulnerable to buyer repayment timings and house price changes. Gareth Davies, the head of the NAO, said Help to Buy had “exposed the government to significant market risk if property values fall, as well as tying up a significant public financial capacity”. The scheme allows buyers to purchase a new-build property of up to £600,000 in value with as little as 5% deposit. It provides 20% of the value of the home, or 40% in London, repayable after five years. The government has made 211,000 Help to Buy equity loans. It has supported 38% of all new-build transactions, making up 4% of all housing purchases during this time. The NAO estimates that without the scheme, 78,000 homes would not have been bought. Help to Buy has long been criticised for bolstering house prices and developer profits. The scheme was extended until 2023 in the 2018 Autumn Budget. It is currently reviewing housebuilder access to the scheme. Davies said: “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.” To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette