The UK Government is set to end its controversial Help to Buy mortgage scheme by the end of this year, it has been announced.

In a letter to Bank of England governor Mark Carney, Chancellor Philip Hammond stated the initiative had a "specific purpose that has now been successfully achieved".

The scheme was launched in 2013 and has helped more than 185,000 people purchase a new home. More than 150,000 households (81%) have been first time buyers.

While the initiative will not be extended beyond 2016, other parts such as the equity loan scheme and the ISA bank account will remain in place.

-- Advertisement --

Critics of the initiative said the scheme would contribute to a crisis by boosting demand for homes without raising supply.

However, the Director General of the Council of Mortgage Lenders, Paul Smee, said: "Help to Buy continues to give a welcome leg-up to many creditworthy buyers who may not otherwise have been able to get a foothold on the property ladder.

"The scheme has helped buyers right across the country, including a high proportion of younger borrowers and first-time buyers. Mortgages for those with small deposits are now becoming more common outside the scheme and Help to Buy has been a significant help for buyers when they were less readily available."

Stewart Baseley, executive chairman of the Home Builders Federation, added: "Help to Buy continues to drive demand for new build homes by making home ownership more affordable and realistic. Its success is directly leading to more homes being built as it provides the confidence developers need to invest in the land and people required to increase their output."

(LM/CD)