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People coming out of Help to Buy with flats valuing less than they paid

ended 29. September 2026

Newspagers say they have clients coming out of Help to Buy and the flats are valuing less than they paid.

One had a flat valued at £500,000 which he had bought at £600,000, paying Help to Buy £175,000.

Andy Burnham's new scheme is yet to work out the small details – they will be announced at the Budget next month.

  • Is this a negative of Help to Buy? Do you worry that the new Your First Home scheme will not learn from mistakes? 
  • What does Burnham's Your First Home scheme need to do differently?
  • Will you be steering clients away from Burnham's new scheme?

Responses asap.

7 responses from the Newspage community

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Matt CoulsonVerified
Founder at Heron Financial
The negative equity here is really a flat problem more than a Help to Buy problem. Values on flats have been hammered by service charges, cladding and lease issues that make them hard to mortgage and sell, and buying at a new-build premium on top left less cushion when values slipped. The scheme's own price effect was modest, around a 5% new-build premium and a 1% uplift, so it amplified the flat squeeze more than it caused it. The equity loan is also repaid as a share of the current value, so if the flat is worth less, the amount owed on it falls too. The real sting is the mortgage, when you can't remortgage or sell without a shortfall. For the successor to learn from this it has to do two things: don't funnel everyone into new-build alone, let it cover existing homes so buyers aren't paying a premium that later unwinds, and be especially careful with flats. And anyone using it should go in eyes open, modelling the remortgage point and the eventual exit before they buy.
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Ranald MitchellVerified
Director at Charwin Mortgages
Help to Buy helped people buy, but it also helped some people overpay. We are now seeing the downside very clearly. Some borrowers bought new-build flats with government support, stretched themselves to the maximum and are now discovering the property is worth less than they paid. That can leave them with very little room to remortgage, repay the equity loan or move on with their lives. The government’s own evaluation found a new-build premium of around 5%, with Help to Buy adding roughly another 1%, while 54% of users said they could have bought without the scheme. That is why another scheme focused only on new builds worries me. If this is genuinely about helping first-time buyers, why exclude the wider housing market? We should be helping people buy homes they can sustainably afford, not creating another mechanism that risks inflating one part of the market and trapping borrowers later.
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Malcolm DavidsonVerified
Director at UK Moneyman
A lot of people that signed up to Help to Buy in the past didn’t seem to know too much about the t’s and c’s of the equity loan element and perhaps got a little carried away buying a shiny new property without properly understanding all the implications when the interest-free period elapsed.

Many buyers probably just opted for Help to Buy for a cheaper initial mortgage payment and that decision came back to bite them later on, so hopefully the new scheme is targeted more towards applicants who simply can’t buy without it.

City centre flats in general are a problem though, “Your First Home’ or no “Your First Home”. Many are now unmortgageable due to the high number of tenants in some blocks which Lenders don’t like plus in many instances ground rents and service charges are too high, which again Lenders tend to shy away from.
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Tracey DixonVerified
Buy-to-Let Mortgage Specialist & Owner at Pure Mortgage and Protection
Helping someone buy is only half the job. If they cannot afford the mortgage at the outset, or cannot remortgage or move when the initial five years are up, the scheme risks storing up problems for later.”

I’m sceptical about another Help to Buy-style scheme for that reason. Lenders’ affordability assessments are more stringent now, and help with a deposit does not guarantee that a buyer will qualify for a mortgage. I would want to see a clear, affordable exit route before recommending the new scheme to clients.
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Jamie ElvinVerified
Director at Strive Mortgages
Help to Buy didn't just help people onto the ladder, it helped developers inflate prices. Many buyers paid a new-build premium on day one and are now trapped in flats worth less than they paid. Burnham's Your First Home scheme must not repeat that mistake. It should include existing homes, not just new builds, and put a stop to developers pocketing the subsidy. I won't steer clients away yet, but if the Budget details look like Help to Buy 2.0, I'll be telling them to think twice.
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Harry GoodliffeVerified
Director at HTG Mortgages
The flats were already overpriced the day the keys were handed over. Help to Buy gave developers a queue of buyers who could only spend on new builds, so prices rose to meet it, and now the buyer and the taxpayer are splitting the loss. Any scheme that funnels demand into one type of property hands the seller everything they need.
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Richard DavidsonVerified
Mortgage Advisor at onlinemortgageadvisor.co.uk
I don't see this as a Help to Buy problem so much as a new build flat problem, particularly in areas with no established second-hand market to support the price. Builders can use incentives to sell flats for more than they're really worth, and when the resale market catches up it's the owner who feels it.

An equity loan shares a fall in value as well as a rise, so in that sense it's no different to a high loan to value mortgage, and the real flaw with both is a system built on the assumption that prices only go up. I won't be steering clients away from Your First Home, but flats should come with a health warning, and the smart way to use it is to put the lower mortgage payment towards overpaying rather than stretching to buy more, so you're building real equity from day one.