Help to Buy was first introduced in 2013 by then-chancellor George Osborne with the aim of opening up the property market to first time buyers on lower incomes, but ended in March 2023 after a decade in place, with Government facing criticism that the increase in demand that wasn't matched by supply had artificially inflated house prices.
Under Help to Buy, buyers needed a five per cent deposit and could borrow up to 20 per cent of the value of a home from Government with the remaining cost plugged by a mortgage from a bank. A price cap, which was set at 1.5 times the average cost of a property in the region, meant prospective homeowners could only use the scheme if they bought a home within the price limits.
New homeowners do not have to pay interest on the Government backed loan for five years, but in the sixth year pay an interest rate of 1.75 per cent. The scheme was more generous in London, which gave people the option to borrow 40 per cent of the property’s value.
According to The Times, Downing Street is now considering whether to reopen the programme in a bid to allow more first time buyers access to the housing market.
But critics have warned that without more homes being built, a return to Help to Buy would fail to deliver on aims to boost the number of young first time buyers, which have reached record lows in recent years. Research from the Resolution Foundation found home ownership among people aged 25-34 fell from 51 per cent in 1989 to 28 per cent in 2019.
Former minister and Conservative MP for Whitney Robert Courts, who is a supporter of Next Gen Tories, a campaign group aiming to tackle the generational divide and unlock the support of the under-45s for the Conservative Party, told PoliticsHome he welcomed measures to boost homeownership, said Help to Buy should not be seen as the "whole answer to the housing crisis".
Courts insisted that the policy stokes demand while failing to tackle supply, which would likely lead to further spikes in average house prices.
"[Help to Buy] won’t solve the housing affordability crisis which is at the root of the problem," he explained.
"We need to be addressing the structural problems in the housing market – improving the build-out rate, access to finance, place-making, infrastructure provision, small housebuilders, and self-build – if we really want to make peoples’ dreams a reality.”
Rural Services Network comment:
The Rural Services Network is concerned that whilst the help to buy system may help people in urban areas access housing, in rural areas where house prices are significantly higher and wages earned in the local economy are lower, there are issues around affordability. In addition, there is a lack of available properties for purchase. Alternative solutions may be required in rural areas to help solve the housing crisis.
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