The Government’s Help to Buy scheme has inflated house prices in England, according to a House of Lords report. The Help to Buy: Equity Loan scheme will have cost around £29billion by the time it comes to an end in 2023, according to the report by the Lords’ built environment committee. It said that this did not provide ‘good value for money’ for the taxpayer. In particular, it claimed that the value of homes in more expensive areas had been pushed up by ‘more than the subsidy value’ – meaning that home buyers would have paid less for their properties had the scheme not existed. This suggests that housebuilders charged more for their Help to Buy-eligible homes, knowing that buyers would be able to borrow 20% of the purchase price from the government, interest-free for 5 years. The report said the money would have been better spent on building more homes instead. If there are more homes available to buy, this can decrease house prices as supply and demand become more evenly balanced. Evidence suggests that, particularly in areas where help is most needed, these schemes inflate prices by more than their subsidy value, the report said. In the long term, funding for home ownership schemes do not provide good value for money, which would be better spent on increasing housing supply.

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