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Return of Help to Buy

Journalist: Jane Matthews, FTAdviser

ended 02. May 2023

Hello newspagers,

You may have heard over the weekend that Sunak is considering reintroducing the help to buy scheme. What are your thoughts on this? Good/bad idea? 

Many thanks,

Jane

8 responses from the Newspage community

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Bob Singh
Founder at Chess Mortgages
Finally the penny has dropped, or an election is in the offing. The Help to Buy scheme needs to return but maybe in another guise. Rather than the bureaucratic old system that favoured new build developers and fuelled a rise in prices, why not limit it to just 10% and keep an orderly market? That way you help 4 people rather than just one in London and 2 outside. The 10% would be an interest-free loan with no payments. With renters facing difficulty in raising deposits, this would work well by helping all first-time buyers get on the ladder by opening it up to second-hand properties. The Government could link this with lenders willing to lend high LTVs to renters who can show a good solid track record in meeting rental payments. Can’t wait to see what it will look like if and when it comes.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Considering housing was totally overlooked in the budget in March, it's no surprise that the PM is having to listen to the cacophony of indignation from those in the property industry and those looking to get onto the ladder. Cynically, you could conclude that this is a political ploy to incentivise younger people to vote with a policy that resonates, announced closer to a general election.
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Justin Moy
Managing Director at EHF Mortgages
For me the Help to Buy scheme has a place, but needs to be part of the solution, not the whole solution. In its original format, It was weighted too much towards new build development which had a knock-on effect on property prices overall - if a new development appeared in your town, and prices were set 'high' whilst supported by HTB, then properties in the immediate area also experienced similar increases in value. Just makes property prices too high for too many. If there were to make changes to the scheme, such as a cap on its use in development, perhaps means testing to ensure it is needed by the applicant, and not just becuase it is available to use. I woudl like to see it extended to non-new build property as well.
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Rohit Kohli
Director at The Mortgage Stop
Help to Buy supported thousands of people into their first home and it's welcome news that it's being considered again after being completely overlooked in the budget. However, this isn't the painkiller to the first-time buyer headache - it has to be part of a wider range of solutions including looking at more innovative ways to help renters who pay thousands a year get through affordability hurdles. Help to Buy itself does need to be looked at as it's not perfect, raising funds to do home improvements, as an example, rather than staircase to full ownership can be problematic. And the fees involved with help to buy schemes can add up very quickly (valuation fees, legal fees etc.)
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Graham Cox
Director at Bridging Hub
Help to buy is a disastrous policy. It's purpose is to help house builders, that's it. First-time buyers just end up paying an inflated price because it's more 'affordable'. In other words, it's simply easier to borrow enough to pay the price the housebuilder wants. Sunak is clearly doing the housebuilder's bidding here. They're all struggling with slowing buyer interest and higher cancellation rates. Lower house prices are what's really required to get the market moving again. But of course that can't be allowed to happen because house builder profits must be protected at all costs.
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Paul Neal
Mortgages & Equity Release Advisor at First Choice Financial Services
Help to Buy has helped thousands of first-time buyers get on the market over the years and it really does have its place provided it is used properly and fully detailed to the client. However, is that the reason the government are bringing it back because they are nearly £2 billion better following more than 375,000 loans being made by the government to people looking to buy their first home?
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Help-To-Buy (HTB) is not the perfect solution and had quite a few drawbacks in its previous form - it only helped new build homes, it arguably accelerated house price growth and although billed as "interest-free" the fact it was an equity loan meant 9/10 times you paid back a lot more than you initially borrowed - interest by another name and at a rate you have no foresight of. The housing market does need assistance, especially for people looking to buy for the first time, or maybe having to start again after a relationship breakdown, but I think we can come up with a better solution than HTB in its previous form.
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Gary Boakes
Director at Verve Financial
Having bought my first house with my wife using the HTB scheme and help hundreds of buyers do the same with a number of builders I can only say that this is fantastic news. The HTB has always had mixed reviews due to the 20% ownership by the government, the rules around doing works to property, debt consolidation, so it is not perfect, but the deposit and rates on offer to be able to purchase your first property I feel has always outweighed the negatives and this would be a great step in the right direction, as ultimately the government hadn't come u with a scheme to replace it and it left a gapping hole in the market.