Labour is considering options for a potential replacement Help to Buy-style scheme as demand for new-build homes has fallen sharply, particularly in London.
Housing minister Matthew Pennycook confirmed discussions are ongoing during a committee session on Tuesday.
Mr Pennycook said: “We are doing things in this space… we have no current plans for a replacement Help to Buy scheme, but we will continue to have those discussions.”
The comments come as new-build property sales in London have fallen to some of their lowest levels since the 2008 financial crisis, according to data from Savills.
The Ministry of Housing is currently reviewing the performance of previous versions of the Help to Buy equity loan programme, with findings expected to be published in spring.
The original Help to Buy scheme operated between 2013 and 2022 after being introduced by then-Chancellor George Osborne.
The scheme allowed first-time buyers to purchase new-build homes with a five per cent deposit, supported by a Government-backed equity loan worth up to 20 per cent of the property price, or up to 40 per cent for properties in London.
An industry source involved in discussions told The Telegraph that a similar buyer support scheme is being considered, although no final decisions have been made.
Housing minister says discussions ongoing as new-build demand falls to post-financial crisis levels
|
GETTY
The Treasury, Homes England and the Resolution Foundation are understood to have contributed to the review process.
The same source said the review had “disproved a lot of myths” surrounding the previous programme and suggested any future scheme could involve financial contributions from developers.
Housebuilders have warned that without measures to support buyer demand, Labour’s target of building 1.5 million homes by 2029 could be difficult to achieve.
Steve Turner, executive director at the Home Builders Federation, said planning reforms alone would not be enough to increase housing supply without strong buyer demand.
The original Help to Buy scheme operated between 2013 and 2022
|
GETTY
Mr Turner said: “You’ve got to have confidence that you’ve got a market to sell your homes into.”
He added: “The lack of government support amidst a death of affordable mortgage lending is suppressing effective demand for new homes, preventing young working people from getting on the housing ladder and stifling investment in new private and affordable housing.”
Industry figures have also pointed to previous financial returns generated through Help to Buy, with loan repayments reportedly generating more than £1billion for the Treasury when properties were sold.
However, any future scheme would likely need to address criticism of earlier programmes.
The original Help to Buy initiative faced criticism from some economists and housing groups
|
GETTY
The original Help to Buy initiative faced criticism from some economists and housing groups who argued it contributed to house price inflation and increased developer profits.
Persimmon’s profits rose significantly during the period, exceeding £1billion in both 2018 and 2019.
Some buyers also faced losses when selling new-build homes due to the new-build price premium.
Borrowing costs could also rise once initial interest-free periods on equity loans ended, increasing financial pressure on some homeowners.
Emily Williams, director of research at Savills, said: “We’d need to be careful about how any scheme was designed, particularly the London equity loan scheme, where you could get 40 per cent. You want a scheme that recognises the nuances of local markets not a blanket scheme.”
A Ministry of Housing spokesman said: “We do not comment on leaks, and there are no plans for another Help to Buy scheme.”
The review comes as ministers face pressure to increase housing supply while maintaining affordability for first-time buyers.
