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PAC: Govt 'broke Treasury rules on Help to Buy'

The Government broke Treasury rules in order to launch its flagship Help To Buy policy by failing to carry out any of the assessments of alternative schemes, PAC have said.

Committee chair Margaret Hodge criticised the Government for failing to be cautious before handing out £10bn in loans.

This means it has committed to spending up to £10 billion on supporting Help to Buy without establishing whether it represents the most effective way of using taxpayers' money to achieve its objectives.

The department will not carry out a comprehensive evaluation of the scheme until 2015, by which time billions of pounds will already have been spent.

– Margaret Hodge

Impact of Help To Buy 'varies according to region'

The effect of Help To Buy, where Government equity loans finance up to 20% of the purchase price of homes worth up to £600,000, has varied in different regions and proved most popular in the north, according to MPs.

The Public Accounts Committee said:

  • The scheme was also popular in the Midlands and areas undergoing extensive regeneration.
  • However, it had less momentum in London and the South East, which has the biggest need for housing.

Read: Help to Buy fails to 'provide value for money'

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Help to Buy fails to 'provide value for money'

The Help To Buy scheme has been criticised for failing to provide value for money and creating risk for the taxpayer by an influential group of MPs.

Read: Inflation falls to 1.5% in May

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Help To Buy has already been accused of helping to create a dangerous housing bubble. Credit: PAd

The Government's flagship policy was accused of creating "medium and long-term risk" to taxpayers who are faced with a £10bn loans portfolio, according to the Public Accounts Committee (PAC).

In a report, the committee said this will create a "heavy administrative burden" for decades to come.

The spending watchdog said the scheme was introduced smoothly and quickly last year and helped 13,000 home-buyers within nine months.

But it noted that Eric Pickles's Department for Communities and Local Government (DCLG) violated Treasury guidelines by failing to carry out any assessment of alternative options before going ahead with the scheme.

Read: EU calls on Britain to raise taxes on high-value homes

Treasury: EU housing call 'in line' with UK approach

European Commission calls for the UK to raise taxes on expensive homes, build more housing and "adjust" the Help to Buy scheme are "in line" with government policy, a Treasury spokesman has said.

"The European Commission continues to support the UK Government's strategy including its commitment to deficit reduction. The Commission's recommendations are in line with the Government's approach," the spokesman said.

Read: Tax expensive homes more

L&G boss warns of 'chronic shortage' of new homes

The group chief executive of Legal & General, Nigel Wilson, has told ITV News house prices will keep rising until the Government is bolder in tackling a "chronic shortage" of affordable new homes.

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L&G boss says Help to Buy is "a huge emotional distraction from the main issue" a chronic shortage of new homes.

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Nigel Wilson says society will never get the quantity of new homes it needs unless the government starts building affordable homes.

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Nigel Wilson "the government should be building affordable homes. It worked in the 40s, 50s and 60s, it can work in 21st century as well"

Read: Help to Buy may not be fuel behind soaring house prices

Help to Buy scheme 'should be more competitive'

Jonathan Harris has called for a wider range of mortgage products in the scheme.
Jonathan Harris has called for a wider range of mortgage products in the scheme. Credit: ITV News

The government's "restrictive" Help to Buy mortgage scheme should offer a wider variety of mortgages to make it more attractive to those eligible, a mortgage broker has told ITV News.

Jonathan Harris of Anderson Harris said: "The products on offer tend to be very short-term fixes and with the rates people are obviously paying a preview for the higher loan-to-values.

"It would be good to see a more competitive product range and more innovation from the lenders," he added.

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Osborne welcomes Help to Buy figures

Chancellor George Osborne has tweeted welcoming figures which show the Help to Buy mortgage scheme has been used in 7,313 purchases so far.

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New stats show 85% of those using #HelptoBuy scheme are 1st time buyers. Helping hardworking people step onto the property ladder

PM: Scheme helps people 'without rich mum and dad'

The Help to Buy scheme is a "huge success" that has helped young people "without a rich mum and dad" to get on to the property ladder, David Cameron has said.

The Prime Minister was speaking after figures showed the government's mortgage guarantee scheme had been used in 7,313 completed purchases in its first six months.

Alexander: Help to Buy 'not fuelling a housing boom'

Danny Alexander brushed off concerns about the £600,000 cap.
Danny Alexander brushed off concerns about the £600,000 cap. Credit: Tim Goode/EMPICS Entertainment

Chief Secretary to the Treasury Danny Alexander says Help to Buy "is not fuelling a housing boom" and dismissed calls for the mortgage scheme's limit to be cut.

Currently, mortgage guarantees are available for homes valued up to £600,000 - but Mr Alexander insists that the scheme is primarily helping people at the lower end of the market.

"What people should take confidence from in these figures is that Help to Buy is helping 95% outside of London, and it is helping people on low and middle incomes," he said.

"The average house price for people who are buying a property under the [mortgage] scheme is £150,000."

PM: Help to Buy offering 'more jobs, more security'

Prime Minister David Cameron has tweeted welcoming today's Help to Buy figures while on a visit to a construction site in Ilkeston in Derbyshire, where Taylor Wimpey is building 280 new homes.

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With @jessicaleemp to see how Help to Buy has helped nearly 28,000 people buy their own home. 85% are 1st time buyers http://t.co/qJoMi0ZKrh

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Help to Buy is helping people get on the housing ladder: 27,000 have bought a new home; 85% first time buyers; 94% outside London.

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Help to Buy is also getting new homes built: 74% of the deals are for new build homes. More jobs, more security and a brighter future.

Read: 7,313 Help to Buy mortgages completed in six months

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