The mortgage guarantee element of the scheme, Help to Buy 2, has already come to an end and now the focus is on the equity loan scheme.
The scheme has obviously stimulated the market and has no doubt been invaluable to first-time buyers struggling to get on to the housing market.
Despite this, however, I think it may be time to review the scheme and make some much needed changes.
Housing market has changed
The housing market is a very different beast to what it was five years ago when the scheme was first introduced.
But, more than that, I think we need to look at the impact Help to Buy is having, and could have, on the market.
It’s clear that while home buyers have been able to get onto the property ladder as a result of Help to Buy, the real beneficiaries have been the house builders.
According to a report released last year by Morgan Stanley, developers profits have trebled since 2013, thanks in no small part to the increase in business as a result of Help to Buy.
Furthermore, there are concerns that house prices have increased because of the scheme.
Would we have seen values remain at a more attainable level if the government wasn’t boosting buyers’ buying power with an extra 20%?
There’s no disputing that Help to Buy has been a huge success but I think we need to change tack now and, in particular, look at whether the London scheme limit of £600,000 is still required.
It’s also time to stop putting a plaster on the housing market wound and start treating it with more sustainable actions including building more homes and agreeing a universal standard for properties of alternative construction methods.
Continuing to let house prices escalate while allowing buyers to take on a loan to meet them can only happen for so long.
We need to look at addressing the issues in the market as a whole.
Indeed we are also to see the effect on borrowers when the government’s Help to Buy portion is to be repaid or interest becomes due on the loan.
The government has confirmed the scheme will not be ending earlier than 2021 as previously speculated – which is fair since many would be buyers may have it in their immediate plans to use Help to Buy – but has not said whether or not it will be extended.
My gut feeling is that it should for the time being, subject to some much needed changes.