Government concern over use of Help to Buy for leasehold properties

The Government minister in charge of England's housing is to examine how the Help to Buy equity loan scheme is working in light of concerns about the type of properties the finance is used to purchase.

James Brokenshire, Secretary of State for Housing, Communities and Local Government, told the Sunday Telegraph that the Government would not support "certain practices" such as the purchase of leasehold properties where the homeowner is tied into annual ground rent payments.

The Help to Buy equity loan is part of a package of Government-financed measures that help first-time buyers and others to get on to the housing ladder. It has been in place since 2013.

However, in 2017, then-Communities Secretary Sajid Javid announced a ban on the sale of newbuild leasehold properties after an increase in developers selling new homes with a leasehold in place and then selling the leaseholds on to private management companies.

Help to Buy has finance in place until 2021, but Mr Brokenshire said an inquiry into the equity loan element of the scheme is essential because the Government was "reflecting carefully" on its effectiveness.

Any overhaul could switch its focus to first-time buyers who have struggled most to buy a home.

In his interview, the Secretary of State said: "…we will reflect carefully on what we're seeing in the market to ensure that as we look to a post-2021 position, and we've made no decisions over this as yet, as to what is needed to support that sense of home ownership, of first time buyers, of getting people onto the housing ladder, and what we need to do next to ensure that that vision of home ownership is felt by more people.

"It's important that we do take action on some of the practices that we have seen, and I think the market has responded to the firm messages we've given, for example, over the use of leasehold houses."

On using Help to Buy finance to buy leasehold properties, where the homeowner must pay annual ground rent and maintenance charges for the lifetime of the leasehold, Mr Brokenshire said: "I just don't think that is needed in other than exceptional circumstances and that practice needs to end."

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