The government’s housing agency, Homes England, has made upwards of £500m from repaid loans and interest payments under the Help to Buy scheme since its launch in 2013.
The scheme enabled buyers to get on the property ladder with government-backed loans of 20% of the equity of a property, or 40% in London. Under the terms of the initiative, if the value of a property rises, the government takes the profit. The initial programme came to an end last year and was replaced with a new version that will run until March 2023.
Over 360,000 households bought homes under Help to Buy between April 2013 and March 2022, with 28% having repaid their loan during this time. The loans are interest-free for the first five years, after which interest is at a rate of inflation at the time plus 2%, and normally last the length of the mortgage, although could be paid off in full or in part at any time.
In addition to the £475million made in loan redemptions, Homes England also made £34.3m from interest on the loans, including the £1 monthly management fee it charges under the scheme.
In total, Help to Buy will have cost £29billion when it finishes in 2023 and has been criticised by some for doing little to tackle the lack of genuinely affordable housing. A report in January from the Built Environment Committee found that it failed to “provide good value for money” for the taxpayer, suggesting instead that the money could have helped to replenish England’s diminishing amount of social housing.
Peter Denton, chief executive of Homes England, argued that out of all the agency’s programmes, Help to Buy has probably had the most immediate impact on people.
He continued: “Once again, the agency has delivered in excess of its targets, with a spend of £2.4billion and 32,000 homes supported. As we prepare for the closure of the scheme in 2023, our focus is on ensuring our partners and our customers understand relevant deadlines and what this means for them.”
Despite the financial return being marked as a positive for Homes England, the agency’s annual report also revealed that it fell short of its affordable homes completion target in 2021-22 by 21.5%, aiming to support the completion of 34,349 affordable homes, but only helped deliver 26,953.
It also missed its targets for overall completions by 15% and the total number of starts it supported, down by more than 10,000 on its target of 48,810. The number of homes unlocked through infrastructure and land finished 38% below the intended target of 94,863 homes at 58,993.
