NEARLY half of the Help to Buy flats sold or paid off in 2024/25 were worth less than their original purchase price, as brokers speaking to Newspage warned borrowers to be wary of buying new-build flats at potentially inflated prices through the Your First Home scheme.
Homes England figures released under a Freedom of Information request in June 2025, covering loans to the end of April 2025, show that almost half of the Help to Buy flat owners who left the scheme in 2024/25 did so with less than they paid. Some are now “trapped” in homes worth less than their purchase price.
Homes England’s data shows that among Help to Buy flats sold or paid off in 2024/25, 45% were worth less than their original purchase price, while just 49% were worth more.
The latest Homes England figures show that 387,274 Help to Buy equity loans were funded over the lifetime of the scheme, including 80,450 for flats and 306,824 for houses.
In 2024/25, 96% of houses that were sold or fully redeemed had increased in value compared with their original purchase price. By contrast, fewer than half of flats had risen in value.
The data revealed an average increase of £33,666, or 13.25%, between the original purchase price and the eventual sale of houses. For flats, the average increase was £7,652, equivalent to 2.76%.
Financial experts told Newspage the figures show many Help to Buy owners are only now discovering their homes are worth less than they paid.
With Prime Minister Andy Burnham promising a new Help to Buy-style scheme, Your First Home, over the weekend, some experts are issuing cautious advice to potential first-time buyers.
Equity
Matt Coulson, Founder at Rickmansworth-based Heron Financial, said there are numerous reasons why many flats are being sold at a loss.
He added: “The negative equity here is really a flat problem more than a Help to Buy problem. Values on flats have been hammered by service charges, cladding and lease issues that make them hard to mortgage and sell, and buying at a new-build premium on top left less cushion when values slipped.
“The scheme’s own price effect was modest, around a 5% new-build premium and a 1% uplift, so it amplified the flat squeeze more than it caused it. The equity loan is also repaid as a share of the current value, so if the flat is worth less, the amount owed on it falls too.
“The real sting is the mortgage, when you can’t remortgage or sell without a shortfall. For the successor to learn from this it has to do two things: don’t funnel everyone into new-build alone, let it cover existing homes so buyers aren’t paying a premium that later unwinds, and be especially careful with flats.
“And anyone using it should go in eyes open, modelling the remortgage point and the eventual exit before they buy.”
Ranald Mitchell, Director at Norwich-based Charwin Mortgages, said many are spending too much on their flats.
He added: “Help to Buy helped people buy, but it also helped some people overpay. We are now seeing the downside very clearly.
“Some borrowers bought new-build flats with government support, stretched themselves to the maximum and are now discovering the property is worth less than they paid. That can leave them with very little room to remortgage, repay the equity loan or move on with their lives.
“The government’s own evaluation found a new-build premium of around 5%, with Help to Buy adding roughly another 1%, while 54% of users said they could have bought without the scheme.
“That is why another scheme focused only on new builds worries me. If this is genuinely about helping first-time buyers, why exclude the wider housing market? We should be helping people buy homes they can sustainably afford, not creating another mechanism that risks inflating one part of the market and trapping borrowers later.”
Buyers
Malcolm Davidson, Director at Hull-based UK Moneyman, said city centre flats remain a problem in terms of value.
He added: “A lot of people that signed up to Help to Buy in the past didn’t seem to know too much about the Ts and Cs of the equity loan element and perhaps got a little carried away buying a shiny new property without properly understanding all the implications when the interest-free period elapsed.
“Many buyers probably just opted for Help to Buy for a cheaper initial mortgage payment and that decision came back to bite them later on, so hopefully the new scheme is targeted more towards applicants who simply can’t buy without it.
“City centre flats in general are a problem though, ‘Your First Home’ or no ‘Your First Home’. Many are now unmortgageable due to the high number of tenants in some blocks which lenders don’t like plus in many instances ground rents and service charges are too high, which again lenders tend to shy away from.”
One expert admitted she was hesitant to recommend the new Your First Home scheme to first-time buyers until they see the full details.
Tracey Dixon, Buy-to-Let Mortgage Specialist & Owner at Cardiff-based Pure Mortgage and Protection, said: “Helping someone buy is only half the job. If they cannot afford the mortgage at the outset, or cannot remortgage or move when the initial five years are up, the scheme risks storing up problems for later.
“I’m sceptical about another Help to Buy-style scheme for that reason. Lenders’ affordability assessments are more stringent now, and help with a deposit does not guarantee that a buyer will qualify for a mortgage. I would want to see a clear, affordable exit route before recommending the new scheme to clients.”
Some of the flats sold to homeowners were “overpriced” on the day they were purchased, according to Harry Goodliffe, Director at Winchester-based HTG Mortgages.
He said: “The flats were already overpriced the day the keys were handed over. Help to Buy gave developers a queue of buyers who could only spend on new builds, so prices rose to meet it, and now the buyer and the taxpayer are splitting the loss.
“Any scheme that funnels demand into one type of property hands the seller everything they need.”
Other experts said the problem lies with new-build flats rather than Help to Buy per se, as the equity loan shares in a fall in value as well as a rise.
Mortgages
Richard Davidson, Mortgage Advisor at Online Mortgage Advisor, added: “I don’t see this as a Help to Buy problem so much as a new-build flat problem, particularly in areas with no established second-hand market to support the price.
“Builders can use incentives to sell flats for more than they’re really worth, and when the resale market catches up it’s the owner who feels it.
“An equity loan shares a fall in value as well as a rise, so in that sense it’s no different to a high loan to value mortgage, and the real flaw with both is a system built on the assumption that prices only go up.
“I won’t be steering clients away from Your First Home, but flats should come with a health warning, and the smart way to use it is to put the lower mortgage payment towards overpaying rather than stretching to buy more, so you’re building real equity from day one.”
However, some experts believe the Help to Buy scheme contributed to inflating prices and many first-time buyers are now trapped in flats worth less than they paid.
Jamie Elvin, Director at London-based Strive Mortgages, concluded: “Help to Buy didn’t just help people onto the ladder, it helped developers inflate prices. Many buyers paid a new-build premium on day one and are now trapped in flats worth less than they paid. Burnham’s Your First Home scheme must not repeat that mistake.
“It should include existing homes, not just new builds, and put a stop to developers pocketing the subsidy. I won’t steer clients away yet, but if the Budget details look like Help to Buy 2.0, I’ll be telling them to think twice.”
