At the end of March, the UK housing market will wave goodbye to the Help to Buy (HTB) equity loan scheme. For many, it will be good riddance, too. While its defenders point to the number of homes sold under the policy, critics have long lambasted HTB as a waste of taxpayers’ money which subsidised listed housebuilders' windfall profits for over a decade and caused house prices to soar.
Yet, even though many will be glad to see the back of it – assuming another government u-turn isn't in the works – HTB's end is set to create a host of new problems. In the midst of the worst housing downturn since 2008, there are concerns about what will happen to the housebuilders whose profits have become arguably too dependent on the scheme, and the house buyers who bought homes under the scheme falling into negative equity (see boxout below).
The housebuilders are already feeling the pinch. Earlier this month, Persimmon (PSN) said in a trading update that the end of reservations under the scheme “had a sharp impact on private sales rates in the fourth quarter and will have an adverse impact on the outlook for 2023”. This month also saw Crest Nicholson (CRST) highlight the scheme’s end as a risk going forward alongside the general market downturn.