A report by the influential Public Accounts committee of MPs has been highly sceptical of the effectiveness of Help To Buy.
It says Help to Buy was originally intended as a short-lived scheme but will now last for 10 years and consume over eight times its original budget.
It will have involved £29 billion in public funds by the time the scheme expires in 2023 “yet the value achieved from its extension is uncertain.”
The all-party committee says that around three-fifths of buyers who took part in the scheme did not need its support to buy a property, and the members suggest that its funding “could have been spent in different ways to address a wider set of housing priorities and focus more on those most in need.”
And the committee says the government - which claims the scheme has so far boosted housing supply of new homes by 14 per cent during its existence - admits that this “has only benefitted one section of society – those that are in a position to buy their own home in the first place.”
The scheme is expected to be revised in 2021 and ended in 2023 - and the committee says it is concerned that an unplanned end to the scheme could result in a contraction in housing supply.
In its conclusions and recommendations section, the report says:
- The department [the Ministry of Housing, Communities and Local Government] should identify the lessons that can be learned from the success of Help to Buy and how these can be applied to future housing schemes;
- The Department should report to the Committee in spring 2020 on the impact it expects changes to the scheme to have from 2021 and how it will ensure that regional prices caps work effectively across regions;
- The Department should undertake a further evaluation of the scheme, to understand its value and necessity from 2017 and to inform the design and operation of the new scheme;
- The Department should report back to the Committee in spring 2020 on how it is working with developers to plan the new scheme from 2021, so that it addresses concerns about developers’ behaviour, and achieves at least as much value;
- The Department should, by the end of December 2019, publish an analysis of the reasons for people redeeming to date—who, when, where, how, and why;
- As part of its next evaluation, the Department should examine the new-build premium, and the impact Help to Buy has had in relation to this;
- The Department should, by the end of December 2019, set out how it will achieve its ambition for 300,000 homes per year without the contribution from the Help to Buy scheme after 2023; and
- The Department should report back to the Committee by the end of December 2019, setting out how its different housing policies and initiatives work together to address England’s housing crisis.
This is by no means the first sharply critical report about Help To Buy.
A National Audit Office report issued in June revealed that between April 2013 (Help To Buy’s instigation) and September 2018, around four per cent of all transactions were secured with Help To Buy; of those four per cent, well over three quarters were first-time buyers.
However, the NAO could not conclude whether Help To Buy had been value for money and it said that three fifths of the buyers could have bought without the scheme anyway.
One in 25 users of Help To Buy had household incomes of over £100,000 per annum.
During Help To Buy’s existence several volume house builders have recorded huge financial successes - and according to some, this is because of the funds steered their way under the scheme.
Persimmon became the first UK house builders to post annual pre-tax profits of over one billion pounds, after its profits tripled in six years; Taylor Wimpery and Bovis Homes also saw roughly a tripling of their profits; and Barratt Homes’ profits rose from £110m to £835m in the same period.