News

May’s £10bn Help to Buy revival ‘like throwing petrol on a bonfire’

Prime minister Theresa May has promised an additional £10bn to support the Help to Buy scheme in order to let another 135,000 people get on the housing ladder.

May announced the cash on BBC’s Andrew Marr show as the Tory Party conference kicked off in Manchester, adding that details about where the money would come from would be outlined in the Autumn Budget on 22 November.

The funds are targeting supporting buyers, especially young people, with getting a mortgage with a deposit of as little as 5% to purchase newly built homes.

But critics of the scheme have argued that it will do nothing to increase the supply of houses. Sam Bowman, executive director of the Adam Smith Institute think tank, said the revival was like “throwing petrol on a bonfire.”

“The property market is totally dysfunctional because supply is so tightly constrained by planning rules, and adding more demand without improving the supply of houses is just going to raise house prices and make homes more unaffordable for people who don't qualify for the Help to Buy subsidy,” he explained.  

“London has the second highest property prices per square metre in the world, only behind Monaco. New build houses are even smaller in the UK than in the Netherlands, despite being the most densely populated country in Europe.

“Only 2% of England is built on, but we’re fenced in by NIMBYs and planning laws that block development nearly anywhere.”

Bowman also argued that to improve the housing market the government needed to change the “rules of the game” to allow damaged parts of the green belt to be built on, so that the country can have more dense and efficient development of existing urban areas, and so locals benefit can from new developments near them.

“Reviving Help to Buy is an astonishingly ill-judged move that may prove economically and politically disastrous for the government,” he concluded.

Polly Neate, CEO of housing charity Shelter, added that extending the scheme was “the wrong priority” at a time when over a million renters are struggling with crippling housing costs. 

“Help to Buy has barely helped the first-time buyers it is targeted at and has done nothing to help those worst affected by our broken housing market and those at risk of homelessness,” she claimed. “Moreover it has increased house prices and propped up a speculative development model in need of reform.

“While we welcome the fact that Sajid Javid has recognised the problem of instability for families who rent privately, we're sorely disappointed that he is talking about encouraging 12-month tenancies when half of all tenancies are already a year or more.

“For the millions of families moved from pillar to post at the whim of a landlord, five-year contracts are the only way to ensure a stable future for those who need it most.”

Today’s news comes after councils said that home ownership was now “unrealistic” for many as prices had soared to eight times average incomes.

Top Image:  Duncan Andison

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