Two years ago I was asked to write an article for @IndyVoices on Help to Buy, the dodgy scheme which the Government launched to make First Time Buyers (FTB) feel that it was helping them onto the property ladder.
At the time I predicted it would be more Help to Buy Tory Votes (which, alas, proved to be true). I also predicted it was likely to contribute to the problem more that to the solution. A report from Capital Economics this week has now confirmed I was right on that too.
The analysts explained boosting demand from first-time buyers without increasing supply has pushed house prices up by 18% between March 2013 and September 2014. As a result the value of a 5% deposit on a typical FTB property has risen by over £1,500. The income required to buy an average FTB house has increased by 12% – while average earnings rose by only 1.5%. The property ladder is more elusive than ever.
At the same time, Government efforts to boost lending to riskier households by allowing them to borrow more (up to 95%) has been negated by efforts by the Bank of England (thank you, Mr Carney) to toughen up mortgage regulations to stabilise the economy.
Like a pyramid scheme, Help to Buy was good for the first tranche of people who took advantage of it, but only to the detriment of subsequent FTBs and the housing market as a whole. It was, however, VERY helpful to housebuilders – many of them big donors to the Conservatives – who were able to use it to shift a lots of often shoddy “starter” homes to captive buyers who could afford nothing else. And FTBs who stretched every sinew to get onto the ladder are now stuck at the bottom, worse off than if they were renting. But nobody cares about them.
Government economists are clearly aware of this. So what lessons have our leaders learnt? Mainly, it would appear, that lying to the voters about housing policies which are advertised as being of help to them is a winner. Which is why the re-elected government is launching more.
Housing associations will be forced to sell their affordable rented properties at a massive discount to people who can either not afford to buy (two thirds are on benefits) or not deserving of a handout from the public purse (some are on £100,000+ a year).
Housing associations have been given any details as to how and by how much they may be compensated from the public purse for the illegal confiscation of their property. They know, as we do, that in order to pay for this madness, the government is seeking to raise £4.5bn from forcing the sale of “the third most expensive” council houses “as and when they fall vacant”.
But in a recent reply to a written question, Housing Minister Brandon Lewis has admitted he didn’t know how this would work. Several council spokespeople I asked also said no one had given them a clue as to how this policy might be implemented in the real world. Mrs Thatcher would had a fit.
Amongst the Tory Manifesto pledges which are now falling by the wayside this is probably the least headline-grabbing. I for one hope is disappears without a trace.