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  • Andy Thurston

Help to Buy - a positive or negative?

The government has lent £11bn to 211,000 home buyers in five years and it is clear this has concentrated building, lending and buying activity into the sub £600k market segment. The National Audit Office (NAO) has said today that Help to Buy is exposing taxpayers to “significant market risk” should property values fall.


Providing 40% of the property value in Greater London and 20% in the rest of the UK has fuelled demand and correspondingly supply creation as house

builders and developers focus in this segment. Has it been positive or negative for the market?



Help to Buy - a positive or negative?


Pro’s

  • Helped 170,000 first time buyers onto the market (housing minister)

  • Increased home building by 15%

  • 40% of new build sales have been supported by the scheme

  • New build annual sales increased from 61,357 to 104,245 since introduction in 2013

Con’s

  • NAO claim two thirds of purchasers using the scheme could have bought without the scheme. Is this driving higher levels of homeowner debt that is necessary?

  • Has the current £11bn – forecast to be £29bn by scheme maturity in march 2023 – just inflated prices and exposed buyers to the risk of overpaying?

  • Given the lag between land acquisition, new build start and completion of the units will the supply tail work through as the demand stimulus falls away? Could this expose those developers and house builders to material risk on their sales forecasts?

What we do know is that debt availability stimulates house prices.


We have the combination of this government stimulus at the same time as all time low interest rates, you can’t help but think these two combined are an explosive combination. Time will tell but developers and house builders should think twice before thinking the Help to Buy market is a one way bet for future schemes.


I applaud the Government being proactive in trying to support the housing market. We need to remain focused on how to achieve higher levels of housing provision that is affordable to society. However this scheme feels like a stimulus that risks driving short term pricing volatility rather than address the fundamental challenge to the sector which continues to be the inefficiency of the planning system and the availability of finance and capital to SME house builders and developers.

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