Help to Buy may be closed to wealthier borrowers
THE Treasury is considering closing the flagship Help to Buy scheme to the better off, amid fears that it is being abused.
Ministers are reported to be planning a ‘fundamental review’ of the policy this year, which could result in a radical overhaul or even closure.
The scheme, started by George Osborne in 2013 when he was chancellor, allows buyers to purchase new-build homes with a cash deposit of just 5 per cent.
They can borrow a further 20 per cent from the Government, or 40 per cent if they are buying in London. The loans are interest free for the first five years and cut the size of the mortgage a buyer needs.
The scheme has proved popular, with the Home Builders Federation crediting it with ‘ driving unprecedented growth in housing supply since 2013’. Policy director David O’Leary said: ‘Without the scheme in some form, the Government’s ambition to deliver 300,000 new homes per year will be even harder to achieve.’
But critics have long warned that the way the scheme is designed leaves it open to exploitation by the better off. Loans are available on homes worth up to £600,000 –
‘Ambition will be harder to achieve’
more than two-and-a-half times the national average, despite it being targeted at first-time buyers. Figures this year showed the average household income of those using the scheme has risen steadily to almost £50,000. In London, the average recipient has an income of £72,000.
Now, the Treasury is poised to look again at the scheme. Options could include scrapping the scheme. But sources suggested it was more likely to involve tightening the eligibility criteria to focus it on the low paid and first-time buyers.
The Ministry of Housing said: ‘The vast majority of those using our Help to Buy equity loan scheme are first-time buyers, as we help a new generation own a home of their own. More than half of households using it earn less than £50,000, so we are also helping those on lower and middle incomes get on the property ladder.’
÷Some 189,000 struggling households are expected to call the National Debtline service this year for help with their bills – more than at any point over the past five years, the helpline said.