Lender association calls for clarity over the future of flagship Help to Buy

Mortgage lenders in Britain are calling for clarity around the future of the popular Help to Buy scheme and warning that a sudden withdrawal would risk disruption in the housing market.

According to the Intermediary Mortgage Lenders Association (IMLA), which represents 43 UK banks, building societies and specialist lenders, the Government has failed to reveal its intentions over the flagship programme which is due to finish in 2021.

It says that the industry needs to know how they should plan in regard to lending to first time buyers and points out that lending to this sector of buyers has recovered to pre economic crisis levels largely due to Help to Buy.

Since it was introduced in 2013 the Help to Buy Equity Loan scheme has resulted in almost 170,000 new homes being built and purchased in England, some 81% of which were by first time buyers. And it is estimated that 43% would not have been able to purchase their home without Help to Buy.

The IMLA says that while it 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.

It also points out that 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 property under existing prudential lending criteria.

In September, the IMLA outlined all 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 IMLA was pleased to note the positive reference to Help to Buy made by the Chancellor in his speech.

‘We are concerned that funding for Help to Buy is due to be withdrawn in 2021, and that there has as yet been no clear signal as to what, if anything, might replace it.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 home ownership and housing supply, we believe that some form of Government support should continue,’ said Kate Davies, IMLA executive director.

‘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,’ she explained.

‘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. 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,’ she added.