The Help to Buy equity loan scheme has netted the UK Government £1.74 billion, according to new data, though falling flat prices are likely to stunt returns in the future.
As of March this year, the scheme had made a £1.24 billion profit on loan repayments from the 214,000 people who have repaid their loans, driven by house price increases. It has also generated £500 million in interest payments on the loans, according to the annual report of Homes England, which manages repayments.
Help to Buy was introduced in 2013 to help people get on the property ladder and closed to new applications in 2023. The Government provided a loan covering up to 20 per cent of a home's value, or 40 per cent in London, with the buyer putting in 5 per cent. The most buyers could borrow was £120,000, or £240,000 in London.
When home buyers repaid their loans, they owed the Government 20 or 40 per cent of the home's value at the time of repayment, not the amount originally borrowed. If house prices rose, which they generally did, the Government made a profit.
The loans were interest-free for the first five years. After that, buyers could pay interest or remortgage to buy out the Government, though the loan had to be repaid if they sold the home. The scheme was limited to first-time buyers only in 2021 and closed to new applicants in March 2023. As of March, around 173,000 equity loans remained unrepaid.
Falling flat prices threaten future gains
While Help to Buy provided a stepping stone into home ownership, it has been criticised for inflating house prices. It has been claimed that some developers raised their prices because they knew many buyers could get a loan of 20 per cent or more from the Government, meaning buyers overpaid for their homes.
Because Help to Buy was restricted to new builds, some of those buyers could now be struggling to sell their homes amid a falling flat market and issues with leasehold apartments. The typical flat fell in price by 5.3 per cent in the 12 months to March, from £199,186 to £188,643, according to Land Registry data. More recent figures from PropertyData suggest the average flat owner sold for £39,509 less than they had paid for their home in the past 12 months.
Homes England acknowledged the risk in its report, stating that the Help to Buy portfolio is particularly sensitive to market risk from changing house prices. It reported operating income of £672 million in 2025-26, a decrease of £184 million, or 21 per cent, on the previous year.
The report cited a £438 million decrease in net fair value gains on financial assets measured at fair value through profit or loss, which it said was predominantly driven by a reduction in the estimated value of properties on the Help to Buy equity loan books. It also noted the fall in London flat prices as a source of additional market risk.
Homes England said that if house prices fell, Help to Buy users may find it more difficult to redeem their loans. Flat owners could be unable to remortgage if price falls left them in negative equity, or with less than 5 per cent equity, after repaying the Government loan. That could result in higher interest income for Homes England, as buyers would be forced to stick with the loan, but this would not match the income generated from loan redemptions.
Calls for a new Help to Buy scheme
Despite its shortcomings, some property experts have called for a new version of Help to Buy to assist first-time buyers. Housing Minister Matthew Pennycook has faced calls to revive the scheme, and there have reportedly been discussions on the topic within his department, though there are no firm plans under way.
Riz Malik, an independent financial adviser at R3 Wealth, said reinstating the scheme could boost the ailing property market. He said that in the absence of a credible alternative, Help to Buy needs to be reinstated as soon as possible, adding that developers made money, but it appeared the Government did too. He said that given the state of the UK housing market, and in the absence of any sizeable rate cuts, the scheme could help provide some impetus to the market.
Jamie Alexander, mortgage director at Alexander Southwell Mortgages, said a new version of Help to Buy could be expanded to include homes that are not new-builds. He said there was plenty of evidence that the scheme had inflated new-build prices, with buyers carrying the cost, and that if it returns, it needs to work differently. He said opening it up to second-hand homes would spread demand more evenly, take some heat out of new-build pricing, and give buyers a wider choice, adding that the principle of a government equity loan is sound.
A report earlier this year by the Institute for Fiscal Studies said Help to Buy had a limited impact on social mobility and mostly helped better-off buyers.
