The Help to Buy website is very clear that under the terms the scheme should support buyers of a home or primary residence and must not be sub-let and therefore, not intended for property investors.
However, an xit2 researcher called a property company call centre for a Mortgage Solutions blog and was reassured he could enlist Help to Buy to purchase a buy-to-let:
“Researcher: “So, I can buy the property, get a 20% interest free loan, rent out as a student house and if the students trash the place and I sell it after three years at a loss the government shares that loss, as long as it is all in my daughter’s name that’s fine?”
Developer sales person: “Yes.”
Mark Blackwell, managing director of xit2 said unless the government penalises property companies, there is no incentive to crackdown on investors misusing the scheme.
“Yes, it’s fraudulent for a ‘parent’ to buy for the child and rent out student rooms using this government scheme, but house developers have had a pretty tough time of it recently, so it’s understandable why they would want to collude in this fashion.
“Should the regulators be doing more to combat this fraud? Absolutely. It reminds me of the 1980s when people were raising money to buy cars and holidays but were dressing up loan applications as applying for funds for a new conservatory.
“Mortgage fraud is a two-way process. Stronger measures than that are needed if indeed the Help to Buy scheme is needed at all,” he said.
Bellway Homes attributed a 27% boost in new home viewings on Help to Buy and other government schemes today.
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