The government has announced it will invest a further £10bn in the Help to Buy equity loan scheme
It is thought that the new funding will assist around 135,000 more people to buy homes by 2021, bringing the total number of households across England assisted by the scheme to some 360,000.
Figures have revealed that 81% of home purchases using the equity loan scheme have been made by first-time buyers, helping to increase the total number of first-time buyers by 70% between 2010 and 2016.
The Help to Buy equity loan scheme launched in April 2013 and funding has been committed until 2021.
The loan can be used to purchase new-build properties up to the value of £600,000, with a maximum equity loan of £120,000 (20%).
In London, applicants are able to claim an equity loan scheme up to 40% of the purchase price.
Earlier this week, the government announced that over one million Help to Buy: ISAs have now been opened by first-time buyers, providing up to £3,000 towards the cost of a first home.
A statement from the Department of Communities and Local Government said: “The new funding expands the Government’s commitment to help people make their dream of owning a home a reality.
“The Chancellor has been clear that support for buyers must be matched with support for building so that, over the longer term, housing becomes more affordable.
“This means land must be made available in the right places to build the homes we need. The Government will therefore consult at Budget on an ambitious package of planning reforms, building on the Housing White Paper.”
However, Sam Bowman, executive director of the Adam Smith Institute, criticised the decision to put more money into Help to Buy. He said: “Reviving Help to Buy is like throwing petrol onto a bonfire. The property market is totally dysfunctional because supply is so tightly constrained by planning rules, and adding more demand without improving the supply of houses is just going to raise house prices and make homes more unaffordable for people who don’t qualify for the Help to Buy subsidy.”
Despite this there is support for the move. Craig Hall, new build manager of the Legal & General Mortgage Club, said that the equity loan scheme has a fundamental role, particularly in helping first time buyers onto the housing ladder.