House builders call for return of Help to Buy to meet Labour’s building target

He said Help to Buy had supported “the fastest increase in housing delivery on record” and was now generating positive returns for taxpayers.

The scheme enabled people to buy a new-build home with a 5% deposit, using an equity loan worth 20% of the price of a house, rising to 40% in London.

It ran from 2013 until 2023 and cost the taxpayer more than £29bn. Advocates said it helped to stimulate housebuilding, with net housing supply almost doubling from 130,610 in 2012-13 to 248,590 in 2019-20.

However, critics argued that house builders used the higher budgets of purchasers to push house prices and profits up, leaving people in overpriced homes that are difficult to sell. Over the 10 years of the scheme, the share price of large house builders, including Persimmon, Barratt and Taylor Wimpey, nearly tripled.

House builders point out that Help to Buy enabled 325,000 households to buy a home and that this is the first time in 60 years the government has not provided support for first-time buyers.

According to the HBF, the original Help to Buy scheme delivered a return of £900m for the government from the first 40% of loans that have been paid back fully by homeowners and interest payments to date.

Its analysis of government data found that, across 154,275 fully repaid loans, the government received an uplift on the original loan value of around 9%, representing a ‘profit’ of £718m, with a further £229m in interest income.

In October, research by property company Savills commissioned by the HBF and the National Housing Federation found that demand for new homes could be boosted either by “a more targeted version” of Help to Buy or a large increase in grant funding for affordable housing.

According to the report, “a big increase in demand support will be necessary” to reach Labour’s target of 1.5 million new homes, which must be accomplished by “real change to the mix of homes coming forward”.

This is because private homes are built to meet “demand”, ie at the rate homes can be sold to make a profit, while affordable and social homes meet underlying housing need, meaning they can be “absorbed much more quickly” by local housing markets.

A revival of Help to Buy, this time part-funded by house builders, was proposed by the Conservatives in July’s general election. The pledge was attacked by David Orr, chair of Clarion housing association, who argued that “every single penny” of public money that went into the original scheme was “effectively wasted”.

“Every time we have subsidised demand in the housing market… it has put prices up,” Mr Orr said.

A Ministry for Housing, Communities and Local Government spokesperson said: “We know that the dream of home ownership is out of reach for too many people. That’s why we will build 1.5 million homes and deliver the biggest increase in affordable housebuilding in a generation.

“We will give first-time buyers the first opportunity to buy new homes, and we will also introduce a permanent, comprehensive mortgage guarantee scheme to support those first-time buyers who struggle to save for a large deposit.”