Committees

Help to buy equity loan scheme

Inquiry

Background

The Help to Buy equity loan scheme is a £3.7 billion programme designed to boost home ownership by making loans to buyers of up to 20% of the value of new build homes up to £600,000 in value. Both first-time buyers and home-movers can apply, regardless of income, so long as the terms are affordable and they are not buying a second home. The scheme is run by the Department for Communities and Local Government and the Homes and Communities Agency (the Agency), through registered private developers and agents.

This is a flagship scheme designed to increase access to home-ownership and encourage housing developers to build more new homes. The scheme is similar to past programmes, such as Firstbuy but covers much more of the market and much more money is available. Because the scheme is an equity investment, the taxpayer will be exposed to the risk from any defaults, bad debts, or fluctuations in house prices. The Agency and the Department will have to manage this risk and also carry any gains and losses on their balance sheets for, potentially, as long as 25 years or even more.

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