Help to Buy new homes Residential

Has Help to Buy had its day?

Q1 2019

With recent controversies over housebuilder profits and poor-quality homes, we look at what the future holds for the Help to Buy scheme.

Following the financial crisis, the number of new homes built in the UK dropped to its lowest level since the Second World War. The Help to Buy equity loan scheme, introduced by George Osborne in 2013, was intended to provide a helping hand to both housebuilders and people trying to get onto the housing ladder.

It’s been a popular scheme, with over 420,000 households taking advantage of the opportunity to secure a new property, but it’s not without its critics. We look at what the future of Help to Buy might hold and what you need to know if you’re thinking of signing up to the scheme.

How does the Help to Buy scheme work?

Under the Help to Buy scheme, homeowners get a government-backed loan for up to 20 per cent of the value of a new-build house (up to 40 per cent in London). With the additional 5 per cent deposit provided by the homebuyer, banks are able to grant a 75 per cent loan-to-value (LTV) mortgage rather than a 95 per cent LTV mortgage.

This gives banks more protection from losing money if house prices fall and helps people to buy a new home even if they don’t have a large deposit.

In 2018, 6 per cent of all home sales in England were supported by Help to Buy, and for some large housebuilders, Help to Buy sales account for almost half their total sales. Most people who’ve benefited from Help to Buy are first-time buyers.

A helping hand to housebuilders

Back when the Help to Buy scheme was introduced, housebuilding was in the doldrums. But that has since changed. Persimmon is one of several housebuilders who reported record profits in 2018 and while the number of new homes still falls short of government targets, there is a lot more housebuilding activity than five years ago.

It’s not a totally rosy picture though. Despite the huge profits, there’s been a reported deterioration in the quality of many new-build homes. There has also been controversy over whether the prices of homes sold through Help to Buy have been over inflated, leaving homeowners worse off than if they had bought outside the scheme.

With pressure mounting on the government to tackle the issue of new home defects and housebuilder profits, is there a future for the Help to Buy scheme?

The future of the Help to Buy scheme

The current Help to Buy scheme runs until March 2021. In November 2018, the government announced a new Help to Buy scheme which will run from April 2021 to March 2023.

The new scheme will be restricted to first-time buyers and include lower regional price caps. The government have also announced their intention to crack down on unfair leasehold practices which have seen many new homeowners hit with surprisingly large ground rents.

What potential homeowners need to know

If you want to get onto the housing ladder or move to a new-build home, the Help to Buy scheme may be a tempting offer. But before signing up, it’s important to understand the pros and cons to decide if it’s the best option for you.


  • Government loan of up to 20 per cent of the house price (40 per cent in London)
  • The loan is interest-free for five years
  • You can use the loan to get a competitively-priced mortgage due to the lower LTV
  • The application process can be quick and easy if you go with the developer’s mortgage broker


  • If you want to sell your property, you’ll share any profit made with the government. This will mean you have less equity to buy your next property
  • You can’t sub-let a property if you want to move or spend time abroad
  • Ground rents can often be high, making it harder to sell your property in future
  • The process can be lengthy, particularly if the property you’re buying isn’t built yet

Also make sure you check out our guide to avoiding a property nightmare when buying a new-build home.