The total value of loans advanced to home buyers under the Government’s Help to Buy scheme has smashed through the £10 billion barrier for the first time.

Since it was launched in the 2013 Budget, more than 195,000 purchasers have used Help to Buy to get on or move up the property ladder, according to official figures published today by the Ministry of Housing, Communities and Local Government. More than 80 per cent have been first-time buyers.

The scheme allows buyers of newly built homes worth up to £600,000 to claim an equity loan from the Government of up to 20 per cent of its value — or 40 per cent in London — provided they can muster a five per cent deposit themselves.

The loan is interest-free for the first five years with an interest rate kicking in at only 1.75 per cent in the sixth year before going up by one per cent more than the Retail Prices Index after that. 

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New-builds in Bow: homes at Lime Quarter went on sale this month priced from £335,000

When the property is sold, the purchasers have to repay the same proportion of the home’s value that they borrowed back to the Government. Today’s figures show that £10.7 billion has been advanced to buyers under the scheme up to September 2018, in little more than five years.

The average purchase price of a property bought under the scheme was £255,542, with an average loan of £54,630. Since the maximum loan in London was increased to 40 per cent in 2016, more than 10,800 purchasers in the capital have used Help to Buy.

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However, Help to Buy has also been criticised for inflating house prices and artificially boosting the profits of housebuilders. Today housebuilder Persimmon became the first in Britain to make more than £1 billion profit in a year.

Mark Dyason, managing director of property broker, Thistle Finance, said: “Property developers have done exceptionally well out of Help to Buy but at some point the drug supply will stop and they will have to go cold turkey.”

Joseph Daniels, founder of modular housebuilder Project Etopia, said: “Help to Buy has come under fire but the Government has already called a halt to the scheme, announcing in October that it will end for all but first-time buyers from 2021.”



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