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Was the Help to Buy Scheme a Help or a Hindrance?

The UK’s Help to Buy scheme was introduced as a way to boost the housing market, whilst helping people easily place a 5% deposit on homes worth up to £600,000. However, it appears that it was a little more successful than the Conservative government anticipated, as there is serious concern that it could create a housing bubble.

Despite many mortgage experts’ initial warnings about the disadvantages of the Help to Buy scheme, the government chose to go ahead with it anyway. While the scheme has undoubtedly helped people take a step on the property ladder, it seems as though it is posing a serious threat to the country’s financial stability. Rising housing prices and large-value mortgages could, therefore, result in the UK facing significant debt problems, which could considerably damage the country’s growing economy.

Whilst David Cameron has stated that the Conservative government is “alert to any dangers and problems” in relation to rising house prices, he has also said he wants to create a culture of owning your own home –  which was inspired by Margaret Thatcher’s Right to Buy scheme that allowed council tenants to buy their homes at a discounted rate.

He recently commented: “I can remember the moment I walked through the door of the first flat I bought and the pride that you feel, and you sense that it is your own, and you can develop and improve it. It is a deep, natural, human instinct, and I fully support it. That’s what the Help to Buy scheme is all about”.

How to Stop the Housing Bubble

As the Help to Buy scheme is pushing up the price of many houses in various UK areas, is it now time to cut back on the scheme to create a more stable economy? I think so, and many politicians agree with me. Nick Clegg, the leader of the Liberal Democrats, recently stated that he believes it is now time for the government to “pare back” on the scheme or face serious debt problems. The Organisation for Economic Co-operation and Development (OECD) has also suggested that the government should cut back the scheme, as well as force buyers to make bigger deposits – but surely that goes against the whole Help to Buy scheme’s philosophy? Offering cheaper rates for more people.

Regulators have also taken steps to make it increasingly harder for people to obtain a mortgage, as borrowers are now subject to tougher lifestyle and affordability questions, ranging from their childcare costs to disposable outgoings. Many ministers have also suggested that George Osborne, the Chancellor of the Exchequer, lower the maximum £600,000 limit; however, he has dismissed the requests.

While the Help to Buy scheme has played a major part in taking the UK out of the recession, it could easily pull them back into another one – whilst resulting in some borrowers undertaking an unsustainable level of debt.

So, maybe it is time to for the scheme to not overstay its welcome and say goodbye once and for all.


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