Speaking on the Andrew Marr Show, Osborne said that the shared equity version of Help to Buy would be extended - he did not announce any changes to the mortgage guarantee version of Help to Buy.
The scheme, which has so far helped over 25,000 households to afford to buy or reserve a new-build home, is to be extended to 2020 and a further £6 billion invested to help 120,000 more households purchase a new-build home.
Every home built under the equity loan scheme is a new-build home, and with research showing the scheme currently supports up to 30% of all new build homes in England, extending the scheme will provide greater certainty to housing developers so they can invest in building the new homes of the future.
The chancellor said Help to Buy had "helped people into homes and... helped build new homes".
"I want to extend the Help to Buy scheme for newly built houses," he told Marr. "It was going to end in 2016; we are now going to extend it for the rest of the decade. That will mean 120,000 new homes."
Shadow chancellor Ed Balls, responded that the maximum size of mortgage for which Help to Buy applies should be cut from £600,000 to less than £400,000 and should only be available to first time buyers. He proposed a "help to build" programme underpinned by new government guarantees to support the building of a further 10,000 houses this year.
The Chancellor also set out ambitious plans and up to £200 million of public investment for a major new development around the high speed rail station in Ebbsfleet in Kent, which is only 19 minutes from Central London, to provide up to 15,000 new homes based on existing brownfield land.
Nicholas Ayre, managing director of homebuying agency Home Fusion, says:
"The extension of the first phase of Help to Buy until 2020 will be welcomed by house builders who have received a significant boost since the scheme was introduced last April. It is telling that the Chancellor has not made the same commitment to extend the mortgage guarantee element of Help to Buy: this may be because it has not been long introduced so it's too early to judge its full impact. It has also been roundly criticised in some quarters for fuelling a housing bubble in London and the south east, so to commit to extending it may leave the Chancellor open to further criticism."
Andy Frankish, New Homes Director at Mortgage Advice Bureau (MAB), thinks with the Help to Buy equity loan scheme extended until 2020, the construction industry can push ahead with buying land and increasing production safe in the knowledge that government is firmly behind it.
Andy said:
"Not only will the move help to address our crippling housing shortage, but the knock-on effect on investment in materials and labour will deliver a major boost to the wider UK economy.
Over the last twelve months Help to Buy 1 has proved very capable of addressing a clear need to increase building activity and boost access to the housing ladder, especially for first time buyers. More importantly, it is doing so by promoting moderate loans on modestly priced homes¹ rather than stoking house price inflation.
Developers are now in a position to cast aside their doubts and focus on ramping up production with a queue of buyers all but guaranteed until the end of the decade. The extension should also encourage more lenders to back the equity loans and boost the choice of available products. A number of major lenders are yet to join the scheme, but with government funding confirmed, any new arrivals would really help to move Help to Buy up another gear.”
