IMLA Calls for Clarity Around the Future of the Help to Buy Scheme

The Intermediary Mortgage Lenders Association (IMLA) is urging the Government to provide much-needed clarity around the future of the Help to Buy equity loan scheme, to prevent destabilisation of the housing market and preserve the ability to offer financing to first time buyers.

The IMLA, which represents the large majority of first time buyer loan underwriters in the UK, notes that the scheme has been well supported by its members and has had significant success in contributing to key Government targets, such as helping more first time buyers onto the housing ladder since Help to Buy was introduced in 2013.

To date, the Help to Buy equity loan scheme has resulted in almost 170,000 new homes being built and sold in England – 81% of which were to first time buyers. Furthermore, it is estimated that almost half (43%) of these buyers would not have been able to purchase their homes without Help to Buy assistance.

The IMLA believes that this has been a major contributor to restoring UK-wide first time buyer lending to pre-crisis levels, with mortgage approvals to the group up by more than a third (34%) since the scheme began.

The organisation recognises that the Government may wish to review the current scope of the scheme and possibly make some adjustments, but warns against a policy cliff-edge that would leave many first time buyers unable to secure a mortgage. With the support of Help to Buy, mortgage lenders have been able to offer loans to younger borrowers, who otherwise would not have been able to secure funding for a new build home under existing prudential lending criteria.

In September, the IMLA outlined all of its concerns in a letter to the Chancellor, Philip Hammond. It was hoped that an announcement might be made at the recent Conservative Party Conference, and the IMLA was pleased to note the positive reference to Help to Buy made the Chancellor in his speech.

Kate Davies, the Executive Director at the IMLA, says: “We are concerned that funding for Help to Buy is due to be withdrawn in 2021, and that there has, as yet, been no clear signal as to what, if anything, might replace it.

“Given its success – and its importance in boosting both homeownership and housing supply – we believe that some form of Government support should continue.”

She continues: “Lenders and borrowers place heavy reliance on the scheme, and a major step-change to arrangements would risk significant market disruption and potentially undermine the Government’s ambitious targets for new housing supply.

“If changes to the scheme are being proposed, lenders will need appropriate notice in order to plan ahead and deliver positive outcomes – hence our wish to have clarity as soon as possible on the Government’s intentions.”

Davies adds: “We look forward to hearing the Government’s plans and to working closely to continue the development of what has become a key element of housing policy.”

Do you believe that the Help to Buy scheme is essential in boosting homeownership and housing market activity?