Sunak considering relaunching Help to Buy scheme - brokers react

Sunak is reportedly drawing up plans to bring back the Help to Buy Equity Loan scheme.

Related topics:  Mortgages,  Help to Buy
Rozi Jones | Editor, Barcadia Media Limited
2nd May 2023
Houses house of parliament commons government govt gov
"Floating Help to Buy again is a sure sign of which way the wind is blowing for house builders."

Over the weekend it emerged that the government is considering restoring the Help To Buy scheme ahead of the next General Election.

The Times reported that Sunak is drawing up plans to boost support for first-time home buyers by bringing back the Help to Buy Equity Loan scheme.

Newspage asked property experts and brokers for their thoughts.

Graham Cox, founder at Mortgage Broker For Self-Employed SEMH: "This is a terrible idea. Floating Help to Buy again is a sure sign of which way the wind is blowing for house builders. They're starting to struggle because borrowers can no longer afford to pay overinflated prices for what is often little more than a shoebox. This policy should really be called Help to Sell, because that's exactly what it is. If Sunak really wants to help first-time buyers get on the property ladder, he should stop intervening and simply let house prices fall so they become truly affordable again. Or does he not believe in free markets?"

Lewis Shaw, owner and mortgage broker at Riverside Mortgages: "This is perhaps the worst idea the Tory government have had since the mini-Budget. Most of the problems caused in the property market are from political intervention and tinkering where none is needed. They should stay the hell out of the market and let it find its equilibrium. Also, this has nothing to do with helping people get homes. It’s a cynical move to buy votes, nothing more, nothing less and no one should be fooled by it."

Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group: "The Help to Buy scheme has the potential to exacerbate supply shortages in the housing market by actually increasing demand for homes. This scheme has often led to higher house prices and further restricted the supply of affordable housing. One of the primary challenges in the housing market is a lack of affordable housing, particularly in urban areas, where demand is high, and land is limited. While the Help to Buy scheme has helped some first-time buyers get onto the property ladder, it has not done enough to address the core issue of supply shortages in the housing market which is what is driving housing unaffordability. While it has incentivised developers to build more homes, the scheme has also led to the construction of higher value homes, which does nothing to improve the supply of affordable homes for people on lower incomes. What we need is less bureaucracy and an objective planning regime to get small builders to build more homes up and down this country."

Samuel Mather-Holgate, IFA at Mather and Murray Financial: "Considering housing was totally overlooked in the March Budget, 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."

Justin Moy, managing director at EHF Mortgages: "The Help to Buy scheme has definitely been a large contributor to the overall property price inflation issue we are experiencing, so it is a surprise to see it mentioned again this weekend, albeit without any of the finer details needed to make a true assessment. But if this is a scheme specific to new build properties, the builders will again be the ultimate winners. Hopefully, the learning points from the previous incarnation will help refine whatever is being proposed, so the benefits are better spread, property inflation is controlled, and perhaps it is available to all buyers on all properties, not just for new build?"

Paul Neal, director of mortgages and equity release at Missing Element Mortgage 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 is fully detailed to borrowers. However, perhaps the real reason the government are considering bringing it back is because they made nearly £2 billion from it on the back of more than 375,000 loans. That and the fact it's a vote-winner with the younger demographic. What we do know is that it will likely drive prices higher once again, and is that what the market - and first-time buyers - really need?"

Scott Taylor-Barr, financial adviser at Carl Summers Financial Services: "Help to Buy is not the perfect solution and had quite a few drawbacks in its previous guise. It only helped new build homes, it arguably accelerated house price growth and while billed as "interest-free", the fact it was an equity loan meant 9 times out of 10 you paid back a lot more than you initially borrowed, i.e. 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 help to buy in its previous form."

Luke Thompson, director at PAB Wealth Management: "This will be good news for developers as they have made billions of pounds thanks to Help to Buy in the past. However, once again this shows the complete lack of any joined-up thinking when it comes to this government's housing policy. To allow the previous scheme to end with no future plans almost felt like the government had given up on the housing sector. I think that if this is to be re-introduced with the usual caveats, it could help first-time buyers onto the property ladder. However, it will also more than likely push up house prices again so it is a double-edged sword. In addition, housebuilders should be given targets if this scheme is re-introduced to ensure that they don't just sit on banks of land and profit from this as prices rise."

Gareth Davies, director at South Coast Mortgage Services: "The Help to Buy scheme contributed hugely to house price inflation and enabled people to buy a property that, in any other world, they simply couldn't afford. People maxed themselves out on a property they shouldn't have bought, with super low rates and, as a result, we are seeing people struggle to re-structure things once the equity loan becomes payable. The only real winners from this scheme were the developers.

Rohit Kohli, operations 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 process can be very expensive for people going down this route."

More like this
Latest from Property Reporter
Latest from Protection Reporter
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.