Almost half of the Help to Buy flats sold or paid off in England during 2024/25 were worth less than their owners paid for them, according to Homes England figures, just as the government lines up a successor scheme.
For investors, the numbers deliver a blunt verdict on new-build flats bought at a premium, and a warning about what the new Your First Home scheme could do to pricing at that end of the market.
The data, released under a Freedom of Information request in June 2025 and covering loans to the end of April 2025, shows 45 per cent of flats leaving the scheme in 2024/25 were worth less than their original purchase price. Only 49 per cent had gained value.
Houses tell a very different story. Of those sold or fully redeemed in 2024/25, 96 per cent had risen in value, with an average gain of £33,666, or 13.25 per cent, between purchase and sale.
Flats managed an average increase of just £7,652, equivalent to 2.76 per cent. Over its lifetime the scheme funded 387,274 equity loans, of which 80,450 were for flats and 306,824 for houses.
Flat values have trailed houses for years, a divergence set out in our analysis of how house prices have risen three times faster than flats since 2020.
Matt Coulson, founder at Rickmansworth-based Heron Financial, argues the problem sits with the property type rather than the subsidy. “The negative equity here is really a flat problem more than a Help to Buy problem,” he said.
“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.”
A new-build premium that later unwinds
The government’s own evaluation of the Help to Buy scheme found a new-build premium of around 5 per cent, with Help to Buy adding roughly another 1 per cent. It also found 54 per cent of users said they could have bought without the scheme.
Ranald Mitchell, director at Norwich-based Charwin Mortgages, put it plainly: “Help to Buy helped people buy, but it also helped some people overpay.”
Harry Goodliffe, director at Winchester-based HTG Mortgages, went further. “The flats were already overpriced the day the keys were handed over,” he said. “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.”
Malcolm Davidson, director at Hull-based UK Moneyman, said city centre flats remain a problem whatever the scheme, warning that 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”.
Prime Minister Andy Burnham promised the Help to Buy-style Your First Home scheme on 26 September 2026, and its new-build focus has put brokers on guard. “That is why another scheme focused only on new builds worries me,” said Mitchell. “If this is genuinely about helping first-time buyers, why exclude the wider housing market?”
Tracey Dixon, buy-to-let mortgage specialist and owner at Cardiff-based Pure Mortgage and Protection, wants the detail first. “I would want to see a clear, affordable exit route before recommending the new scheme to clients,” she said.
Not every broker is hostile. Richard Davidson, mortgage advisor at Online Mortgage Advisor, said: “I won’t be steering clients away from Your First Home, but flats should come with a health warning.”
Jamie Elvin, director at London-based Strive Mortgages, said the scheme “should include existing homes, not just new builds, and put a stop to developers pocketing the subsidy”. He added: “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.”
It is one of several policy shifts landlords are watching, alongside rent controls under active review since Burnham took office.
What this means for investors
The lesson for portfolio investors is that the new-build premium is paid on day one and, on flats, is often never recovered. If Your First Home channels demand back into new-build stock, developers’ pricing power is likely to rise with it.
Anyone buying new-build flats should model the exit as carefully as the yield, since service charges, cladding and tenant concentration hit resale and mortgageability hardest. As Coulson put it, buyers should go in “modelling the remortgage point and the eventual exit before they buy.”
There may be opportunity on the other side. Owners stuck in negative equity could become motivated sellers, and well-priced second-hand flats can still work where yields hold up, a point Zoopla’s Richard Donnell has made about London leasehold flats. The Budget detail will show whether the new scheme repeats Help to Buy’s mistakes.
