Warning Of Help To Buy Lending

The National Audit Office (NAO) has warned against the amount of taxpayers' money that is at risk from potential downturns in the housing market.

 

This comes as it was revealed that almost £12bn has been lent to buyers of new properties under the Help to Buy scheme. This is also forecast to rise as high as £25bn. 

 

The Help-to-buy scheme is designed to help individuals who are struggling to save up for a deposit for their first home or move up the property ladder. Under the scheme, buyers will only need to raise a deposit of 5% of the property value, while the government will then provide a guarantee for a further 15%.

 

Buyers usually have to pay interest on these government loans in return for their support in getting on the property ladder. The Help-to-buy scheme usually brings a profit for the government as the rising house prices have covered the loans that buyers have taken through the scheme. However, it has been warned that the rising house prices may not continue. 

 

"At points when the market turns down (whether over the near, medium or longer term), the taxpayer could lose out significantly, as the Government's investment in housing capital would reduce in value. Furthermore, property owners could face the trap of negative equity, exacerbated by the new build premium," the spending watchdog warned.

 

The housing minister Kit Malthouse said: "Help to Buy has been genuinely life changing for first-time buyers across the country, helping them secure their first step on the property ladder. Not only has it supported more than 170,000 first-time buyers, it has increased home building by nearly 15pc, and is set to make a profit for the public: it's been a win-win." 

 

It is due to end completely in 2023 after a decade since being introduced. 

 

Solicitors in Wilmslow