Fresh figures revealing that the government has made nearly £2 billion from the Help to Buy scheme have prompted mortgage and property experts to urge ministers to bring it back “as soon as possible.”
Homes England’s latest annual report shows the Treasury has generated around £1.74 billion from Help to Buy equity loans repaid so far, including £1.24 billion in profits on its equity stakes and approximately £500 million in interest payments.
The financial returns come as Housing Minister Matthew Pennycook is understood to be actively reviewing whether Labour should reintroduce a version of the flagship scheme, which helped almost 390,000 households buy a home before it closed to new applicants.
Scheme delivered significant taxpayer return
While critics have long argued that Help to Buy inflated new-build prices and boosted developers’ profits, experts said the latest figures demonstrate that the scheme also delivered a substantial return for taxpayers. However, most agree that any replacement would need to be redesigned to avoid repeating its shortcomings.
Many commentators said the principle of helping first-time buyers overcome the deposit hurdle remains sound, but warned that a revived scheme should extend beyond new-build homes, include tighter safeguards, and tackle housing supply if it is to make a lasting difference rather than simply pushing prices higher.
Riz Malik, an Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said: “In the absence of a credible alternative, Help to Buy needs to be reinstated as soon as possible. Developers made money, but it appears the government did as well.”
He added: “Given the state of the UK housing market at present, in the absence of any sizeable rate cuts, it can help provide some impetus to the market. Burnham and his housing minister need to give this some urgent consideration. Waiting until October for the budget will be too late.”
Figures reveal a more awkward truth
Matt Coulson, Founder at Rickmansworth-based Heron Financial Ltd, added: “The popular story is that Help to Buy simply filled housebuilders’ pockets. The figures tell a more awkward truth. On the loans repaid so far, the taxpayer has made around £1.74 billion, a £1.24 billion gain on its equity stake plus roughly £500 million in interest, and that is only the 55% redeemed to date.”
Coulson acknowledged: “There is fair criticism in there, and I am not here to defend housebuilders: any demand subsidy risks pushing prices up, and some benefit did land with developers. But it also helped nearly 390,000 households buy and returned a profit, so calling it a giveaway is too simple.”
He concluded: “The demand-side problem it was built for has not gone away. If it returns it should be smarter: aimed tightly at first-time buyers and specific property types so it lifts buyers without inflating the market, and redesigned to remove the five-year interest cliff edge that caught the last cohort out. Bring back the principle, not the old branding.”
Review underway and future design considerations
The revelation that only 55% of the equity loans have been redeemed so far means the total profit to the Treasury could rise further as more loans are repaid. The scheme’s closure to new applicants in recent years left many first-time buyers without a similar government-backed route onto the property ladder.
Housing Minister Matthew Pennycook’s reported review suggests the government is considering a return of the scheme, potentially with modifications. Any new version would likely need to address the criticisms levelled at the original, including its focus on new-build properties and the potential for price inflation.
As the housing market continues to face challenges, including high interest rates and affordability pressures, the debate over how best to support first-time buyers is likely to intensify. The government’s decision, expected around the time of the autumn budget, will be closely watched by industry experts and prospective homeowners alike.
