2 The impact of the Scheme
11. The Scheme assisted with the purchase
of nearly 13,000 homes in its first nine months of operation,
with around a further 9,600 completions in the pipeline at that
point. The Department told us that the Scheme had successfully
hit its target group. The Department's initial business case stated
the Scheme was aimed at 'deposit-constrained' potential buyers.
Around 70% of buyers using the Scheme have put down a 5% deposit,
and only 3% have provided a deposit of 25% or more; by comparison,
in 2012, home buyers in the UK put down, on average, a 32% deposit.
First-time buyers made up 89% of Help to Buy equity loan sales
up to the end of December 2013, and the purchasers generally bought
relatively inexpensive homes and had modest incomes.[14]
12. The Department told us that it was
monitoring the Scheme's progress to assess whether it is having
the desired impact. It also confirmed that it was committed to
evaluating the Scheme in 2015, and to present the results in its
2014-15 annual report, but it said that it had not yet drawn up
plans for this evaluation.[15]
The Department accepted that to establish whether the Scheme has
been value for money, its planned evaluation must gather evidence
of whether it has enabled people to buy homes who could not have
done so otherwise, and encouraged developers to build additional
houses that would not otherwise have been built. However, it said
it has not yet collected robust data systematically from developers
and purchasers about what they would have done differently in
the absence of the Scheme. The Department told us that it estimates
that between 25% and 50% of purchases through the Scheme had lead
to the construction of a new home that would not have been built
without the Scheme. The Department accepted, however, that it
needed to carry on improving and refining its monitoring of the
Scheme, and that, in the full evaluation, more robust methods
would be required that went into greater depth than its routine
monitoring of progress.[16]
13. Evidence from the first nine months
of operation suggests that the Scheme is working differently in
different areas across England. The National Audit Office found
that the Scheme has been particularly popular with buyers in the
North and the Midlands, and the Department conceded that, typically,
places that have had the highest numbers of sales through the
Scheme are ones that have seen regeneration and major new housing
growth, such as Milton Keynes.[17]
14. The Scheme has had much less impact
in London and the South East. London, for example, is an area
of high housing need, but although 15% of purchases of newly built
homes were made in the capital from April to December 2013, only
6% of the Scheme's loans were made there in the same period. The
Department suggested that buyers in London face different barriers
to home ownership than are seen in other parts of the country,
which might explain the relatively low take-up of the Scheme there.
Data suggest that buy-to-let purchases of new build property are
also slightly higher in London than in the rest of England, but
such sales are excluded from the Scheme.[18]
15. It will be for the Scheme's formal
evaluation to determine whether the Scheme works equally well
for all parts of the country. The Department said that it has
the ability to analyse the impact of the Scheme at various geographic
levels, for example postcode, Local Enterprise Partnership or
former Housing Market Renewal Pathfinder areas. The Department
told us, however, that the Scheme's objectives were set at national,
rather than regional or local, level.[19]
16. This Scheme is one of several interventions
by the Government that attempt to address a wide range of complex
problems within the housing market. The Department explained that
Government only intervenes where it thinks there is a market failure.
For many years, the level of private home-building in England
has been insufficient to meet the need and demand for accommodation
by the growing population. Despite the increased number of housing
starts since the property crash in 2007 (the Department reported
a 29% increase since the Scheme was introduced), the Department
agreed that the gap between need and supply remains wide.[20]
The Scheme does not attempt to address other elements of housing
market dysfunction, for example, issues with planning or land-banking.
Furthermore, the Department said that the Scheme affects only
a relatively small proportion of the market. However, the Department's
market intelligence and the National Audit Office's research have
indicated that the Scheme may be improving the confidence and
appetite of house builders, and may be encouraging them to build
more new homes.[21]
17. The Department has several other
major housing market initiatives besides the Scheme. These include:
reforming the planning system to ensure new private housing developments
also lead to the construction of affordable housing; an affordable
housing scheme that is building 170,000 properties during this
spending review period; and a scheme to encourage smaller builders
to construct homes. The Department also told us about a range
of initiatives to support new build-to-rent investment and to
bring institutional investors into the private rented market,
a programme to support custom-built homes, and schemes to unlock
the viability of sites where there is an infrastructure issue.[22]
In addition, we reported in October 2013 on the introduction of
the New Homes Bonus in 2011; a non-ring-fenced payment made to
local authorities for every home added to the council tax register,
which aims to incentivise local authorities to increase the supply
of housing, both through building new homes and returning empty
homes to use.[23]
18. The Department told us that its
approach to evaluation in the past had tended to focus on evaluating
the individual components of its housing strategy. This has meant
that the Department has not assessed what the combined impact
of its interventions has been on increasing the supply of new
homes. The National Audit Office concluded that unless the Department
develops a robust and joined-up method of evaluating its housing
market initiatives, it will be unable to make informed decisions,
based on which interventions offer the best return to the taxpayer,
about what level of funding to allocate to future initiatives.[24]
14 Qq 70-72; C&AG's Report, paragraphs 2.1-2.2 Back
15
Qq 4, 11, 21-22; C&AG's Report, paragraph 3.31 Back
16
Qq 14, 16, 21, 41, 44-47, 54, 73-74 Back
17
Qq 59-60 Back
18
Qq 51, 58-60; letter from the Department to the Committee, 10 April 2014; C&AG's Report, paragraph 2.3 and Figure 7 Back
19
Qq 54, 80 Back
20
Qq 5, 18, 61-62, 83-84; C&AG's Report, paragraph 1.2 and Figure 1 Back
21
Qq 18, 23, 33, 64; C&AG's Report, paragraphs 21, 2.5 Back
22
Qq 54, 68, 84 Back
23
Committee of Public Accounts, The New Homes Bonus, Twenty-ninth Report of Session 2013-14, 23 October 2013 Back
24
Q 58; C&AG's Report, paragraph 3.32 Back
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