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Developers defend Help To Buy’s cost to taxpayers

A new analysis claims Help To Buy has improved building volumes and has not been a drain on taxpayers.

The scheme which opened in 2013, has now supported more than 300,000 homebuyers to purchase a new build home, with more than four in five purchasers being first timers.

The analysis from the Home Builders Federation - representing developers whose profits have benefited from the scheme - claims:


- Up to March 2020, 49,020 Help to Buy Equity Loans had been fully redeemed, 18 per cent of all the loans issued up to that point;

- 60 per cent of equity loans issued in the first two years of the scheme (2013/14 and 2014/15) were fully repaid by March 2020;

- During 2019/20, the Exchequer received £941m in repayments of loans with an original value of £875m, an increase of £66m.

The report also highlights the link between the introduction of the scheme and the rapid increase in housing supply seen in England since 2014, detailing how strong the new build housing market has been relative to the second-hand market. 

By early 2020, annual new build transactions were back to roughly the same number as those recorded before the financial crisis of the late 2000s. In the secondary market, however, transactions were still some 30 per cent short of historic figures.

Under the Help to Buy scheme, homebuyers can receive an equity loan from the Government, allowing them to purchase a new build home with a deposit of five per cent of the property’s value. The equity loan is interest free for the first five years. 

The maximum value of the equity loan is 20 per cent of the value of the home, with a higher maximum of 40 per cent in London. 

Since April 2021, the £600,000 national price cap for the scheme has been replaced with regional caps ranging from £186,100 in the North East to £600,000 in London.

Commenting on the research, HBF executive chairman Stewart Baseley says: “For many years we have heard first hand of the impact that Help to Buy has had in turning the dream of home ownership into a reality for so many households and we have seen evidence of the link between the scheme and the additional investment by home builders which has driven rapid housing supply increases. 

“Now we can also see that the scheme is contributing to public finances as homebuyers pay back government support.”

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    Help To Buy - Dictionary: "Help to buy an over-priced cardboard house for too much money because the developer knows you can only buy this one, then sell it two years later for less than you paid even in a rising market, but the developer did well, so all is fine."


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