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"Don't bet against Help To Buy making a sudden reappearance"

ended 21. August 2023

Following house builder, Crest Nicholson, noting the impact of the end of Help to Buy in its trading update this morning, some experts have warned against a return of the scheme — but others have suggested a “sudden reappearance” cannot be ruled out ahead of a General Election.

In its trading update, where it announced it expected adjusted pre-tax profit to be £50m in the year ending October 31, down from £73.7 million, Crest Nicholson said: “Additional mortgage borrowing for those looking to upgrade or for those with low levels of equity, notably first-time buyers, has become significantly more expensive with no Government support (following the end of Help to Buy) now in place to cushion this impact."

Darryl Dhoffer, founder of Bedford-based The Mortgage Expert, said: “With all eyes looking at a possible General Election in Spring 2024, it's possible both the Conservatives and Labour will use the reintroduction of Help To Buy as part of their manifestos to get voters onboard, and help boost the flagging new build market. This year has been very much focused on consolidation and cuts to tackle high inflation and restrict consumer spending, so don't bet against Help To Buy making a sudden reappearance.”

But Lewis Shaw, founder of Mansfield-based Shaw Financial Services, warned against the scheme returning: “The last thing the property market needs right now is more free money going into the system. We need to let the market find its natural equilibrium without further interference from the Government. No, it's not going to be pretty, but the sooner the day of reckoning is upon us, the sooner we can start to come out the other side.”

Ranald Mitchell, director of Norwich-based independent mortgage broker, Charwin Private Clients, agreed with Shaw: “Help to Buy did nothing but encourage people to buy property they couldn't ordinarily afford on a buy now, pay later basis.” 

Much the same stance was taken by Stephen Perkins, managing director at Norwich-based Yellow Brick Mortgages: “Overall the scheme probably did more damage than good with the increases in house prices that it brought about.”

Meanwhile, others questioned the timing of the end of the Help to Buy scheme. Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial, said: “When the housing market desperately needed stimulus, the Government allowed Help to Buy to be retired and introduced no replacement. Both buyers and builders need incentives and the Tories have abandoned them. I don’t expect any new initiatives to be unveiled as the whole department is incompetent. The housing market looks set to be a driverless car until Labour take over.”

Joe Garner, managing director of property consultants, Joe Garner Consulting, also questioned the end of the Help to Buy scheme: "Withdrawing Help to Buy without an alternative measure in place has left both first-time buyers and first-time owners up the creek without a paddle."

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8 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
With all eyes looking at a possible General Election in Spring 2024, it's possible both the Conservatives and Labour will use the reintroduction of Help To Buy as part of their manifestos to get voters onboard, and help boost the flagging new build market. This year has been very much focused on consolidation and cuts to tackle high inflation and restrict consumer spending, so don't bet against Help To Buy making a sudden reappearance.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
There has been a lack of imagination in housing from this Government for years. When the housing market desperately needed stimulus, the Government allowed Help to Buy to be retired and introduced no replacement. Both buyers and builders need incentives and the Tories have abandoned them. I don’t expect any new initiatives to be unveiled as the whole department is incompetent. The demographic of first-time buyers tend to suggest they are least likely to vote, and even less likely to vote Conservative so the Government's focus is likely to be elsewhere. The housing market looks set to be a driverless car until Labour take over.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Help to Buy did nothing but encourage people to buy property they couldn't ordinarily afford on a buy now, pay later basis. This has worked out for some homeowners and less so for others. All this whilst propping up the newbuild property builders. I am not in favour of such taxpayer schemes and the onus should be on the builders to get competitive, offering innovative ways such as shared ownership or other equity share initiatives to shift their product. It seems like every time we hit some kind of problem, all eyes are on the Government to bail out or introduce something else to support. How did we all survive in the 70s, 80s, 90s and 00s?
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
Help to Buy, whilst helping first-time buyers achieve a property they could otherwise not have afforded, was really of most benefit to house builders. This gravy train allowed great demand for their homes, and affordability was boosted enabling more premium sale prices. Overall the scheme probably did more damage than good with the increases in house prices that it brought about. I do not think new homes should be incentivised over the second-hand market. New homes should boost many benefits such as efficiency, shiny new tech and customisation, without winning market share as being the only affordable home due to government support. I would like to see a similar equity scheme for deposit-boosting first-time buyers only on any property that would help first-time buyers get on the ladder and across the housing market as a whole.
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Justin Moy
Managing Director at EHF Mortgages
In a declining market, I cannot see the government introducing a scheme where they will shoulder some of those losses through a similar Help to Buy Scheme. Rather than introducing a new scheme, they could just use that effort to fix other parts of the economy to help all mortgage borrowers. Looking back over the last 10 years or so, such schemes have been popular with First Time Buyers, but many now feel trapped and have significant costs to repay the loan. This wouldn't be the way to win over voters.
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Joe Garner
Founder & Managing Director at Joe Garner Consulting
The Government has to be consistent. Any scheme of the magnitude and scale of Help to Buy has a massive impact on housing prices, delivery and quality. Withdrawing Help to Buy without an alternative measure in place has left both first-time buyers and first-time owners up the creek without a paddle.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Whilst Help to Buy may not have been the best solution as it could be argued that the biggest beneficiaries were builders' bank balances, it is apparent that without some sort of Government intervention the prospect of building enough houses in the UK to keep up with demand is an even more distant prospect. The Government is in full-blown circle the wagons mode with a General Election next year. At this point, those would-be first-time buyers probably wouldn't vote for them anyway but the NIMBY voters who want to pull up the ladder after them just might. That means I don't think we'll see much support for building or supporting first-time buyers.
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Gary Boakes
Director at Verve Financial
Having bought a property with my wife using HTB, this helped our family massively as we needed a larger property for our children and only had a 5% deposit. Having also worked with a large number of builders the majority of our clients have bought using the scheme and wouldn't be able to own a home witout the scheme. New builds need help at the moment and the return of the HTB will certainly see more foot traffic at new build sites. The biggest advantage and downside now to the HTB was the rates being seen as a 75% LTV rate, so the rates were very low compared to 95% LTV mortgages, which meant people did probably push for the larger more expensive property, but with rates fairly similar across all LTV this would actually cause less issues long term., and people would hopefully be more realistic. The HTB will be a massive win if brought back at a time when we need something positve.