The Department for Communities and Local Government (now the Ministry of Housing, Communities and Local Government) introduced the Help to Buy: Equity Loan scheme in 2013 to boost the supply of new homes and support home ownership. The Ministry expects the scheme to support the sale of up to 360,000 homes by 2021, at an outlay of around £22 billion. It forms part of the government’s plans to address the shortage of housing in England and to deliver 1.5 million new homes in England by 2022.
Homes England administers the scheme on behalf of the Ministry. Through the scheme, buyers of new build properties take out an equity loan of up to 20% of the property purchase price (up to 40% in London), to enable them to buy a property with a deposit from 5% and a mortgage with a loan-to-value ratio from 75% (55% in London). The loans are interest free for 5 years, after which buyers must pay an annual interest fee. All buyers must repay the loan in full within 25 years or when the property is sold. The loans represent a significant, and growing, government asset.
The government announced in the October 2018 budget that a new scheme would be launched for two years from 2021, with some changes to eligibility criteria compared with the current scheme, and that the scheme would close in March 2023.
This report will follow up on our 2014 study “The Help to Buy Equity Loan Scheme”. We will assess whether the scheme has been value for money to date, and whether it is likely to be so in the future. The report will:
- examine the impact of the Help to Buy: Equity Loan scheme, and what has been achieved to date against the scheme’s objectives;
- assess how the Ministry are managing the risks to their investment, and whether the scheme is likely to deliver a positive return for the taxpayer; and
- review the Ministry’s planning for the new scheme and winding down of support, which is due to end in 2023.
If you would like to provide evidence for our study please email the study team on firstname.lastname@example.org, putting the study title in the subject line. The team will consider the evidence you provide; however, please note that due to the volume of information we receive we may not respond to you directly. If you need to raise a concern please use our contact form