Help To Buy scheme helped thousands who could afford a property without it

An official report has found that almost two-thirds of the 211,000 buyers who used the scheme had enough money to buy a property without it.
An official report has found that almost two-thirds of the 211,000 buyers who used the scheme had enough money to buy a property without it.

An official report has found that almost two-thirds of the 211,000 buyers who used the scheme had enough money to buy a property without it.

The report by the National Audit Office found that only 37 per cent of people who have benefited from Help to Buy would not have been able to afford a property without it.

The spending watchdog found that around four per cent of buyers handed a loan under the scheme had a household income of more than £100,000.

The scheme, which helps first-time buyers take the first step on the property ladder, comes in two forms, Help to Buy loans and Help to Buy Individual Savings Accounts (Isas).

For Help to Buy loans, the government lends up to 20 percent of the cost of a newly built property, so buyers need only a 5 per cent deposit and a 75 per cent mortgage to buy it.

Those purchasing a new-build home are not charged interest for the first five years.

Gareth Davies, head of the NAO told the BBC: "Help To Buy has increased home ownership and housing supply, particularly for first-time buyers."

"However, a proportion of participants could have afforded to buy a home without the government's help.

"The scheme has also exposed the government to significant market risk if property values fall, as well as tying up a significant public financial capacity.

"The government's greatest challenge now is to wean the property market off the scheme with as little impact as possible on its ambition of creating 300,000 homes a year by 2021," he said.

The Help to Buy ISA gives savers a 25 percent bonus from the government when they withdraw the money they have saved to buy their first property. The maximum purchase price outside of London is £250,000.

The maximum government bonus that someone can receive is £3,000, if they have saved £12,000.

Persimmon is the biggest beneficiary, with almost 15 percent of the sales made under the Help to Buy Scheme.

The house builders saw its annual profits top £1bn last year.

Up to December 2018, £11.7bn had been loaned under the scheme with that figure forecast to peak at around £25bn by 2023.

The government's investment is expected to be returned from the scheme by 2032 after it closes in 2023. However, the size of the loans mean it is very much exposed to the performance of the housing market.

From April 2021, the scheme will be restricted just to first-time buyers.