The government’s controversial Help to Buy scheme has been under attack this week, from parties as diverse as the International Monetary Fund (IMF), the Bank of England, the Sun and the G15 group of housing associations.
Help to Buy involves an equity loan from the government of up to 20 per cent of the value of a home, interest free for five years. From January 2014 there will also be government-backed mortgage guarantees to support high loan to equity lending, provided the purchaser can raise a deposit of at least five per cent of the value of the home.
The G15 group of leading London housing associations this week called for the government to divert some of the Help to Buy resources to Low Cost Home Ownership schemes, pointing out that fewer than 3,000 homes for sale in London (2.5 per cent of those advertised in the first quarter of 2013) would be affordable to single people with median earnings. And looking at all households, the picture is almost as bleak, with only 3.5 per cent of properties for sale being affordable with Help to Buy assistance.
National Housing Federation figures show that the funding devoted to Help to Buy equity loans could support more than twice the number of affordable home ownership units