Calls from major housebuilders for renewed support for first-time buyers have reopened the debate over whether demand-side schemes can improve access to homeownership without pushing up new-build prices.
Property Soup revealed last week how Bellway CEO Jason Honeyman has explicitly called for Help to Buy to be revived, alongside greater stamp duty support. Taylor Wimpey chief executive Jennie Daly has also advocated measures including equity loans or property tax relief, while other developers have pressed ministers for stronger support for new-build demand.
The interventions come as elevated mortgage rates and deposit requirements continue to restrict purchasing power, contributing to weaker sales rates and shrinking order books across parts of the housebuilding sector.
However, as revealed yesterday in Mortgage Soup, Charlie Lamdin (main picture), founder of BestAgent and presenter of Moving Home with Charlie, warned that increasing buyers’ borrowing capacity would treat the symptoms of poor affordability without addressing its underlying causes.
HELP FOR BUYERS OR SUPPORT FOR PRICES?
The former Help to Buy Equity Loan scheme supported 387,195 purchases between April 2013 and May 2023, including 328,346 by first-time buyers. The Government provided £24.7bn in equity loans towards properties worth £109.2bn, according to official statistics.
Supporters argue that these figures demonstrate the scheme helped hundreds of thousands of households overcome deposit and affordability barriers while sustaining demand for newly built homes.
Its record was more mixed when measured by how many purchases would otherwise not have happened. A National Audit Office review found that 37% of participating households could not have bought any property without Help to Buy. However, around three-fifths could have purchased something without it, while 31% could have bought the property they wanted anyway.
The same review estimated that the scheme had generated approximately 78,000 additional new-build sales by December 2018 and increased new housing supply by 14.5%. This suggests it produced some additional construction, although substantially fewer extra homes than the total number of purchases supported.
DANGEROUSLY SHORT-SIGHTED
Lamdin said: “Calls to bring back Help to Buy are dangerously short-sighted. They ignore its long-term impact on house prices and affordability and the millions of aspiring buyers it left behind.
“Housebuilders calling for another Help to Buy scheme is understandable, but we need to distinguish between stimulating demand and making housing more affordable. Giving buyers more money to spend in a supply-constrained market risks allowing sellers to charge more, not drive affordability.
“We’ve seen before the damage Help to Buy did to both buyers and the wider market, putting many of those who used the scheme in negative equity due to new home costs being inflated and then dropping in value. This has caused irreparable damage to the housing market.
“You cannot make homes more affordable by giving people more money to spend on them.”
“Simply building more homes will not automatically make them cheaper.”
He added: “The UK housing market doesn’t have a shortage of ways to borrow money – it has a market-function problem. It is slow, and purposefully confusing with too much focus on stimulating demand rather than improving the way the market actually works.
“If the Government genuinely wants to improve affordability, it should gradually reduce high lending multiples and longer mortgage terms, which have increased buyers’ purchasing power and helped sustain higher prices.
“Simply building more homes will not automatically make them cheaper if access to debt continues to expand.
“We should learn from Help to Buy, not repeat it.”
HOUSING TRADE-OFF
The dispute leaves ministers facing a familiar trade-off. Targeted assistance could help deposit-constrained buyers and provide housebuilders with the confidence to develop more sites, but a broadly available scheme risks subsidising purchases that would have happened anyway and allowing some of the benefit to be absorbed through higher prices.
Any successor would therefore be likely to attract demands for tighter income and price limits, developer contributions and safeguards for buyers paying a new-build premium.
