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Help to Buy: has it worked?

A man on top of a house building the roof
Half of the houses built by Persimmon last year were bought via the government’s Help-to-Buy scheme. But critics say the initiative has created a housing bubble and that housebuilders’ bumper profits are undeserved. Could this lead to an unwinding of the scheme?

Annual results from Persimmon (LSE: PSN) confirm it: Help-to-Buy has been a boon for the housebuilders. The FTSE 100 group’s profit per house has trebled since the scheme was introduced in 2013 and last year, return on average capital employed rose to almost 53%. That means that for every £1 invested, the company is making 53p back – an almost unheard-of figure. In 2012 (the year before the scheme was introduced), the group generated an average return on capital employed of just 12%.

These figures are starting to make people uncomfortable about the Help-to-Buy scheme: who is really benefiting from an initiative which has sucked up £20bn of taxpayer money to date?

The answer depends on who you ask.

By the end of 2018, almost 200,000 property purchases had been completed under the scheme, helping many young buyers who otherwise may not have been able to get onto the housing ladder. Of the 16,449 houses Persimmon built last year, 7,970 were bought…

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