Public Accounts Committee: The HTB scheme hasn’t made homes more affordable

Michael Lloyd

September 17, 2019

The Help to Buy scheme has not made homes more affordable or addressed other pressing problems in the housing sector, the Public Accounts Committee has revealed.

The committee found the scheme helps those that are in a position to buy their own home but does not address issues with the wider planning system or other problems in housing.

Nick Sanderson, chief executive at Audley Group, said: “Government initiatives like Help to Buy sound laudable however the Public Accounts Committee report lays bare its flaws.

“The scheme might have boosted housing supply, but it has done nothing to address other fundamental problems in the system.

“Nothing is being done to free up the abundance of under-occupied housing stock in the UK, or help those who are living in those houses move to more suitable properties.

“Initiatives like a stamp duty holiday for over-65s, that focus on those that have the power to bring movement to the housing market would mean fewer new homes were needed in the first place.

“The government needs to wake up to the real issue in the housing market and be brave enough to address them.”

Help to Buy has increased housing supply by 14% according to the department.

While the scheme has helped many people to buy properties who otherwise would not have been able to, a large proportion of those who took part reportedly did not need its help.

By December 2018 the scheme had supported some 211,000 households to buy properties, through loans totalling £11.7bn.

Some 37% of buyers said they could not have bought a property at all without the support of the scheme.

However this implies that around three-fifths of buyers did not need the support of the scheme to buy a property.

Meg Hillier, chair of the Public Accounts Committee, said: “Help to Buy has certainly increased the supply of new homes and boosted the bottom line of house builders.

“But it has also tied up a large sum of money, forecast to be nearly £29bn in cash terms by the time it concludes in 2023, making the value of what has been achieved uncertain.

“While many people have been helped to buy properties who would have not otherwise been able to, an even larger group of buyers did not need its financial support.

“Help to Buy, as the department acknowledged, only benefits those in a position to buy their own house in the first place.

“It does not help make homes more affordable nor address other pressing housing problems in the sector such as the planning system or homelessness.

“The scheme exposes both the government and consumers to significant financial risks were house prices or interest rates to change.

“Better consumer protection needs to be built into similar schemes in the future.”

The committee argued the department’s decision to keep equity loans as unregulated products means there is insufficient protection for buyers.

The committee also found the department has allowed the scheme to become a semi-permanent feature of the housing market and argued that the government has not yet thought through the changes needed for better value ahead of the new scheme starting in 2021.

Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “With Help to Buy due to be restricted from 2021 and closed down completely in 2023, time is of the essence for the government to provide more clarity on what will take the place of the scheme.

“It has stated that it will not replace Help to Buy with another similar scheme – so IMLA has been pushing for other measures that will help lenders to fill the gap.

“For example, the FCA’s current affordability rules make it hard for first-time buyers to meet the stringent requirements to qualify for a mortgage.

“Actual payments which borrowers would need to make in the current low interest environment would be lower than what they are paying in rent to private landlords.

“The report published today by the Public Accounts Committee clearly shows that more dialogue is needed between government, regulators, lenders and builders to forge a coherent policy which will enable responsible lending on well-designed property that is affordable both for first-time buyers and those on lower incomes.”


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