Help To Buy Failures Exposed by PricedOut

  • Over 500,000 renters can no longer afford homeownership since Help To Buy launch
  • 13 times more people have been priced out than have been ‘helped’
  • Only 2% of Help To Buy mortgage guarantee scheme has been utilised

As the Bank of England’s Financial Policy Committee is today expected to release the findings of its review into the government’s ‘Help To Buy’ house purchase schemes, PricedOut is today releasing its latest analysis on the impact of the schemes on first-time buyers.

PricedOut campaigns for an affordable housing market on behalf of those who seek to own their first home, and has been a long-standing critic of the Help To Buy schemes. PricedOut argue that pumping more mortgage debt into the housing market can only have an upward pressure on house prices, which leaves far more people unable to afford a home than are able to benefit.

The latest research by PricedOut shows that since the announcement of Help To Buy in March 2013, an additional 531,000 renters have been priced out of the housing market by rises in the average first home purchase price. The PricedOut Index, which monitors the number of taxpayers currently living in the private rented sector and unable to afford their own home, currently shows a total of 3.77 million renters who are currently priced out of the UK housing market.

The latest Help To Buy statistics suggest around 79,000 people have bought their first home under the equity loan and mortgage guarantee schemes. This means that for every buyer ‘helped’ by Help To Buy, 13 people have been priced out by house price increases since the scheme’s inception.

Duncan Stott, director of PricedOut, said, “These figures expose the fundamental weaknesses of the government’s ill-conceived ‘Help To Buy’ scheme. The only thing that extra mortgage lending can cause is a rise in house prices, which leaves homeownership even further out of reach of Britain’s fed-up renters”.

Mortgage guarantees – ‘a welcome flop’

The most widely criticised component of Help To Buy, mortgage guarantees, appear to be turning out to be having a much more limited impact than was initially suggested by George Osborne. When the scheme was originally announced by the Chancellor in the 2013 Budget, he stated that an additional £130 billion of mortgage lending would be triggered by mortgage guarantees. However PricedOut’s analysis of the latest official data shows that only £2.7 billion of mortgage lending has been guaranteed under this part of the scheme.

Duncan Stott commented, “The threat that Help To Buy posed to the housing market was rightly flagged up by a wide range of experts at the time, but thankfully the amount of lending that the mortgage guarantees have triggered has been extremely limited. It looks like this part of Help To Buy has been a welcome flop. We are now urging the government to stop pursuing such dangerous gimmicks and instead develop a long-term plan to bring stability to house prices so that ordinary young people’s earnings have a chance to catch up.”

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