The government’s Help to Buy scheme could be ditched amid fears it is pushing up house prices and helping wealthy people upgrade their homes.
Ministers are reportedly planning a “fundamental review” of the policy, which was introduced by David Cameron in 2013 in a bid to help people onto the housing ladder.
It may be replaced by a scheme “more targeted on those it is meant to be helping”, according to The Telegraph.
It comes after research published last week showed one in five households taking advantage of Help to Buy used the scheme to upgrade their existing home, rather than use the money to buy a first property.
The current funding for Help to Buy is due to end in 2021, but housing developers and mortgage lenders are keen for the government to lay out its plans going forward.
An option being considered by ministers is a temporary, restricted version of the scheme, which would avoid the disruption that would be brought about by terminating the scheme with just three years’ notice for developers.
Earlier this year, official government data revealed the average household income of people benefiting from the £8.3bn scheme is continuing to rise, and now stands at just under £50,000.
In London, the figure is even higher, with the average recipient of a Help to Buy loan having a household income of almost £72,000.
The scheme, which sees billions of pounds of taxpayers’ money handed out each year, gives buyers cash loans that enable them to purchase a property with just a 5 per cent deposit.
It comes after the Resolution Foundation suggested Help to Buy should be scrapped, saying it drives up house prices and takes money away from other areas of housing.
The average new build property now costs £50,000 more than when the scheme was introduced in 2013, it said.
The think tank said in a report: “HTB appears to have served a useful purpose when it was first introduced – restoring confidence to developers and promoting a pickup in house building. But its effect looks increasingly distortionary, suggesting that it may be time to phase it out.”
It added: “Since early 2016 the growth in new-build prices has outpaced price growth for existing resold property, strongly suggesting that equity loans have enabled developers to set prices at higher levels than otherwise.”
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies