Taxpayers’ money has sustained the bubble rather than helping with affordabilityby Daniel Bentley / May 1, 2017 / Leave a comment
It is four years since George Osborne, tired of waiting for housebuilding to pick up from its historically low post-crash levels, gave the industry a shot in the arm. The then Chancellor’s Help to Buy scheme provided government loans worth up to 20 per cent of the value of a new-build property (later increased to 40 per cent in London), topping up what commercial mortgage lenders were prepared to offer.
On the surface, this seems to have been a success. The number of homes built annually has increased by about a third since then, with 112,000 new homes purchased with £5.3bn of Help to Buy money by the end of 2016. The scheme’s beneficiaries include about 90,000 first-time buyers over the period, and it is still growing in popularity: in the final three months of 2016 there were 12,104 Help-to-Buy loans issued, the biggest number in any quarter since they were introduced.
Underneath these headline figures, however, little has improved. Strip out the 33,600 new-builds that were purchased with a Help to Buy loan last year and the number of completions was just 130,000, barely higher than it was in the years before the scheme’s launch. So housebuilding output has only improved to the extent that the government has been prepared to give people money to buy new homes with. The underlying problem of meagre private-sector output has not gone away.