Government refuses to give certainty on future of Help to Buy

August 7, 2017 / Isla MacFarlane
Government refuses to give certainty on future of Help to Buy

Recent media reports have surfaced that the Department for Communities and Local Government (DCLG) has asked the London School of Economics (LSE) to conduct an independent evaluation of the Help to Buy Equity Loan Scheme.

According to a report from Property Week, the government was considering all options, including scrapping the scheme before its appointed cut-off date in April 2021.

However, while the DCLG has batted away rumours that the scheme will be axed prior to 2021, it has stopped short of giving the housebuilding industry what it needs: certainty that the scheme will continue beyond 2021.

“We remain committed to the Help to Buy equity loan scheme to 2021, ensuring it continues to support homebuyers and stimulate housing supply,” the DCLG said in a statement. “The government also recognise the need to create certainty for prospective home owners and developers beyond 2021, so will work with the sector to consider the future of the scheme.

“The department regularly reviews the Help to Buy equity loan scheme, with the last review taking place in 2015. To infer from this that the Help to Buy equity loan scheme will be cancelled is simply incorrect.”

Growth for the construction industry in 2018 will be heavily reliant on private housebuilding, according to the Construction Products Association, however there remains a reliance on Help to Buy equity loans to drive housebuilding numbers. The policy is expected to support demand for new build and drive growth in private housing starts of 3.0% in 2017 and 2.0% in 2018.

However, this is slower than in previous years given uncertainties over the strength of consumer confidence and falls in real earnings.

Mention of Help to Buy has been conspicuously absent from all government manifestos. Housebuilders’ share prices took a tumble on rumours that the scheme would scrapped late last week. Housebuilders are left hoping that the government’s review will result in confirmation that the scheme will be extended.

John Elliott, Managing Director of Millwood Designer Homes, said, “The Government-backed Help to Buy scheme has provided the largest single boost to the UK property market in recent times, and in the new build market, it is the single most important factor fuelling activity amongst first time buyers.

“We have seen a strong uptake of Help to Buy at our developments and in particular, our Woodlands View development in Hastings, saw at least half of the homes being sold through the scheme. We value the Government’s ongoing commitment to ensure that home buyers are able to start or move up the property ladder through this vital scheme.”

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