The scheme helped high-income people buy homes. Now, if prices sink, taxpayers will be on the hook, new report warns.
The UK’s government’s flagship “Help to Buy” equity loan scheme, launched ostensibly to give cash-strapped first-time buyers a leg up onto the property ladder, has dished out billions of pounds of publicly subsidized loans to relatively well heeled homeowners who were perfectly capable of buying their first property without need for outside help, asserts a new report by the National Audit Office (NAO).
The report, which used figures supplied by the Ministry of Housing, Communities and Local Government, found that only 37% of the roughly 210,000 people who have so far benefited from Help to Buy would not have been able to afford a property without it. Since the scheme is not means tested, anyone can apply and qualify for the loans, including people earning more than £100,000 a year, who reportedly account for 4% of the total borrowers.
One particularly egregious example is Conservative MP Peter Boone who, in 2016, used the scheme to buy a new constituency home, purchasing the £175,000 home in his wife’s name, with a £35,000 equity loan from the government. The first five years of that loan are interest free — hence the term “equity loan” – after which borrowers are charged 1.75% interest on the outstanding amount.
It’s a pretty sweet deal for Mr Boone and his wife, but perhaps not so much for UK taxpayers. But according to the Department for Housing, Communities and Local Government, such abuses are an “acceptable consequence” of designing the scheme to be widely available…