The Government has failed to demonstrate whether its £3.7bn Help to Buy equity loan scheme is giving value for money, the public spending watchdog has warned.
George Osborne, the Chancellor, launched the scheme in England last April to give creditworthy buyers with a deposit of at least five per cent a leg-up onto the property ladder. But in a report published today, the National Audit Office said there is no method in place to measure the "joined-up" impact of a string of recent government initiatives to inject new life into the housing market.
Margaret Hodge, the Labour MP who chairs the Public Accounts Committee, said she was "shocked" that the Government is ploughing billions into the scheme without fully understanding its effects. “It is simply unacceptable that there is not a coherent plan to evaluate Help to Buy or to even understand its impact on other housing initiatives,” she said.
The NAO also found that in around one in 62 (1.6 per cent) sales completed under the equity loan scheme last year, the home buyer had a deposit of less than five per cent .
Amyas Morse, head of the NAO, said that Help to Buy is generally "running smoothly". But he warned: "The scheme's costs, which come in large part from tying up £3.7 billion long-term in the housing market, will be substantial."
The NAO found that the Government is on target to make equity loans to 74,000 households over three years. Ministers expect to get back the investment in cash terms after 15 years and go on to recoup £4.8 billion. But the NAO said the Department for Communities and Local Government’s cash flow would vary and the impact in some years could be “unaffordable.” The NAO could not yet "robustly" quantify the benefits of the scheme.
Kris Hopkins, the Housing Minister, insisted: "The Help to Buy Equity Loan will help 74,000 hard-working households buy a home without costing taxpayers a penny. Over 25,000 people have reserved a new build home in just 10 months, with 89 per cent of sales to first time buyers. More homes are being built as a direct result of the programme, with housing starts up by 23 per cent in 2013, the highest level since 2007.”