The government’s £29bn Help to Buy scheme has pushed up house prices in England and failed to “provide good value for money” for the taxpayer, according to a House of Lords report published on Monday.
Cash spent on the scheme could instead have helped to replenish England’s falling stock of social housing, said the report’s authors, who sit on the Lords’ built environment committee.
The “scheme, which will have cost around £29bn in cash terms by 2023, inflates prices by more than its subsidy value in areas where it is needed the most . . . This funding would be better spent on increasing housing supply,” according to the report.
Help to Buy was designed to boost home-ownership by providing an equity loan to buyers. However, it has been criticised as a developer subsidy that does little to tackle the lack of genuinely affordable housing.
The stock of social housing has shrunk by close to 500,000 homes since 2000, according to an analysis of official statistics by housing charity Shelter.
“Help to Buy has had its virtues, particularly outside of London. But in London and those hotspots of demand, it’s gone straight into price. That’s been the problem,” said Baroness Neville-Rolfe, chair of the committee.
Chart showing the changing source of housing supply
Almost 340,000 homes have been bought using the equity loan since Help to Buy was introduced in 2013, the large majority by first time buyers. In the same period the share price of leading builders including Persimmon, Barratt Homes and Taylor Wimpey has nearly tripled.
Developers defend the scheme, saying it has helped boost the number of houses built and broadened access to them. “Since its introduction in 2013, Help to Buy has been the biggest contributing factor in the doubling of housing supply,” said David O’Leary, policy director at the Home Builders Federation, an industry body.
The scheme was now paying dividends for the Treasury, he added, “with a return of around 10 per cent from the 70,000 equity loans already fully paid back by homeowners”.
The Lords committee has put forward a number of proposals for addressing the national housing shortage, calling on the government to reform the planning system, support small builders and redirect funds towards new social housing and training for construction workers.
The government published a white paper in August 2020 outlining ambitious plans aimed at simplifying the byzantine, often-sclerotic planning system. That would have been a boon for small and medium-sized developers, who struggle to navigate the lengthy, costly planning process.
SME builders account for just 10 per cent of new housing built in England today, down from 39 per cent in the late 1980s, according to the report, which says boosting their number is important to solving the shortage.
But the plans have been put on ice by Michael Gove, who replaced Robert Jenrick as housing secretary last year. He is expected to introduce a watered-down version of the reforms as part of a wider levelling-up package later this year.
“Uncertainty about the future planning system and delays to planning reforms have had a ‘chilling effect’ on housebuilding and created uncertainty for housebuilders and planners,” said the report, which draws on evidence from housing industry groups, charities, think-tanks and academics.
I would say there needs to be more incentives or a push for housebuilders to build then, but given the quality of housing stock they’re producing, I’m not sure I’d wish that on my worst enemy.
It’s classic supply and demand, the demand is good, affordable housing, but FTBs are getting poor to shit, barely affordable housing that may well stray into negative equity.
I really disagree with a lot of HTB schemes being limited to new builds too.
So as far as the government is concerned it has done the job it was meant to.
We live in the depressing reality where people know housing is too expensive yet the government doesn’t want them to go down because that’ll be unpopular with the electorate. Particularly if ‘negative equity’ starts appearing in news headlines as it will hurt those who’ve bought recently the most (esp. first time buyers).
No shit! It bolstered demand while doing absolutely nothing about supply issues. Anyone who knows anything about economics will tell you that will only have one outcome.
So you’re telling me that enabling more people to buy a limited resource ***increased*** the price?
Shocking.
A scheme to help people into homes would be one thing, this is a scheme to help people into and overinflated *investment vehicle.* We really need to sort out our attitudes to bricks and mortar, but that’s a journey you wouldn’t choose to start from here.
Is anyone surprised? Demand goes up, supply is constrained and costs are rising. It is predictable that this will have an inflationary effect on house prices.
Home owners benefit from this, Landlords benefit from people who cannot buy their own houses, and the Tory party would represent these interests.
IMO its working exactly as designed.
Surely though the cost of new builds is also a problem. Where I live an old 40s/50s/60s mid terrace is a good 30-40% cheaper with a much bigger garden than the new builds which have slightly smaller bedrooms and kitchens and a tiny garden.
Don’t get me wrong you won’t have the problems that might come with an older house but it still doesn’t warrant the extra money.
You’re telling me first time buyers, that have never owned property before, with their suppressed incomes, the ones being complained about for buying too many lattes & avocado toast… *they* are the ones that caused an exponential increase in house prices?
✉️📄 *BLUFF*
Its not a bug its a feature and doing what is was supposed to do. The Tories have ZERO interest in fixing the problem…
Same with stamp duty holiday, such a stupid idea that only assisted those who already had houses and raised the prices for first time buyers who weren’t paying it anyway.
Yup, and openly exploited by some Tory MPs like that cunt Peter Bone
A quick-fix solution to a difficult problem had unintended consequences? Who would have thought.
Now back to nationalising energy & railways, oblivious to any negative side effects.
We need first time buyer locked properties and we need them now. I.e properties that cannot be bought by anyone other than a first-time buyer. Not a renter, not a pensioner, not a council, not a developer. 100% first time only. Let them get on the ladder, build equity and transfer to a new first time buyer.
That’s probably not a perfect solution, but I don’t see us stopping people buying multiple fucking houses in the coming century so…
Housebuilders would be more incentivised to build out the homes they have planning permission for if:
A) planning permission would expire sooner, with penalty fees for excessively delayed building
B) covenants to limit or outlaw rental for X years after being built
C) Rental market caps. With less landlords willing to pay over the odds to build their little nest eggs, and with the rental market lowered the needed fall in house prices could only be met by building more homes to actually sell.
For arguments sake on rental caps, have landlords be required to pay for a 10 year license to operate which includes a house valuation fee per property. This is used to set the cap fair for each local area. You then have the carrot of license removal for bad landlord practises.
D) Land turned over to councils earmarked for housing that is unfulfilled after X years. Councils can choose to build themselves or likely sell the land again.
Shoulda been called “help the rich to sell for more money”.
Tory policies are always going to be for the benefit of the rich, it’s what Tories do.
and 7 times ones salary in places, the foundations of our economy……..
So the Conservative government squandered £29bn of public money on Help to Buy like they did with the £37bn on Test and Trace and now workers are to be hammered with tax rises in April.
Painful though these tax rises will be they only raise £12bn per year so that puts into perspective the amounts squandered.
And let’s not forget the £23bn spent annually on housing benefits which largely go to private landlords charging high rents.
It’s hard to imagine how a government could have failed more in housing policy.
Why don’t they do a help to build scheme instead?
Sat round the table yesterday having dinner with a few folk. All homeowners, all earning combined households above let’s say 40k.
Me and wife – big help from our parents. Host and partner – big help from parents. Other couple – help from parents, took on a lodger for a bit, inheritance.
And we’re sitting there over dinner saying how lucky we are compared to everyone else.
The tipping point is coming soon and it’s a fucking disgrace that it’s easily been avoidable all this time by governments who think getting folk on the property ladder should be an afterthought to 4 bedroom shitty built new builds.
We shouldn’t be saying we’re lucky. Situations like ours should be the outlying on the opposite end of the scale and everyone should be able to afford a property without the massive deposits.
I’m probably more fortunate than most as I managed to buy last year. Prior to that we were looking at houses in Chelmsford, which is quite a nice town for 250k. Obviously we got priced out quickly.
We managed to buy a house in Basildon for 270k. Fucking Basildon. 270k?! Why do I have a feeling I paid too much and it’s going to bite me in the arse?
Well duh.
It just extended the price curve on the demand side, in the same way that low interest rates do.
i mean, that’s obvious though right? By having banks give loans designed to enable the purchasing of housing at all time highs, you just perpetuate the sale of housing at all time highs…
did people really think that loans would ***lower*** the overall housing market cost?
When there’s a shortage housing will always cost the most people can afford, if they make it more affordable the price goes up to match.
So it worked.
Making the boomers singular asset worth more and helping the tories get re elected.
Ever since the “lesson” of John majors loss in 1997 every political party in England has vied to pump House prices. Without fail.
Lots of people in here saying it’s a supply-side problem (and rightly so).
But as a planning consultant, nobody wants homes being built near them.
So what’s the answer?
A colossal £30 billion failure to tackle the problem that ALSO managed to over-inflate the cost of housing for an entire country.
Gold-plated butt-plugs have been awarded all around.
What amazes me about the last 12 years is how there’s always another new level to achieve in peak-Toryism. It is the largest pile of stinking political crap in the Western world at this point and I’m including Trumpism here.
I’ve been looking at one of these type of homes and all I hear about is horror stories of the government loan you get as part of it and people not being able to pay it back and then can’t afford it when it’s gets lumped into the mortgage after 5 years.
When I went to speak to the sales agent I knew more about how the scheme worked then they did, I looked for 5 minutes on their website before I went to speak to them. Really put me off and I actually want to move.
This is like how when I drink 10 G&Ts, I’m suddenly drunk and have no idea how it happened. I wonder what could explain these strange occurrences…
My wishlist in terms of policy:
* The abolishment of new leasehold properties. The new standard to become commonhold, and all leasehold property owners have an automatic right to transition to commonhold as a stakeholder in the overall building, proportionate to the number of flats in the building. Example, if a company owns 9/10 flats to rent and you own 1, you have a 10% stake in the building.
* Corporate entities are not allowed to purchase residential property. Only individual humans (and married couples) can buy residential property, and corporations are not individual humans. Existing companies with portfolios are given 15-20 years to sell and find a new means of income.
* Abolish mortgages that require below 10% as the deposit
* Eliminate right-to-buy for council housing
* Introduce a new tax for second homes based on the value of the property and the need of housing in the area.
* Ban the purchase of residential property by foreign investors that haven’t lived in the UK for a combined 5 years or more.
In terms of wooly ideas, the goal should be to keep house price growth to a minimum, only growing enough in value to make up for the interest on the loans taken out to buy them. The focus should be on empowering unions and making sure salaries increase faster than house prices. That way, nobody goes into negative equity, and new salaried workers can actually catch up.
30 comments
Author: George Hammond
The government’s £29bn Help to Buy scheme has pushed up house prices in England and failed to “provide good value for money” for the taxpayer, according to a House of Lords report published on Monday.
Cash spent on the scheme could instead have helped to replenish England’s falling stock of social housing, said the report’s authors, who sit on the Lords’ built environment committee.
The “scheme, which will have cost around £29bn in cash terms by 2023, inflates prices by more than its subsidy value in areas where it is needed the most . . . This funding would be better spent on increasing housing supply,” according to the report.
Help to Buy was designed to boost home-ownership by providing an equity loan to buyers. However, it has been criticised as a developer subsidy that does little to tackle the lack of genuinely affordable housing.
The stock of social housing has shrunk by close to 500,000 homes since 2000, according to an analysis of official statistics by housing charity Shelter.
“Help to Buy has had its virtues, particularly outside of London. But in London and those hotspots of demand, it’s gone straight into price. That’s been the problem,” said Baroness Neville-Rolfe, chair of the committee.
Chart showing the changing source of housing supply
Almost 340,000 homes have been bought using the equity loan since Help to Buy was introduced in 2013, the large majority by first time buyers. In the same period the share price of leading builders including Persimmon, Barratt Homes and Taylor Wimpey has nearly tripled.
Developers defend the scheme, saying it has helped boost the number of houses built and broadened access to them. “Since its introduction in 2013, Help to Buy has been the biggest contributing factor in the doubling of housing supply,” said David O’Leary, policy director at the Home Builders Federation, an industry body.
The scheme was now paying dividends for the Treasury, he added, “with a return of around 10 per cent from the 70,000 equity loans already fully paid back by homeowners”.
The Lords committee has put forward a number of proposals for addressing the national housing shortage, calling on the government to reform the planning system, support small builders and redirect funds towards new social housing and training for construction workers.
The government published a white paper in August 2020 outlining ambitious plans aimed at simplifying the byzantine, often-sclerotic planning system. That would have been a boon for small and medium-sized developers, who struggle to navigate the lengthy, costly planning process.
SME builders account for just 10 per cent of new housing built in England today, down from 39 per cent in the late 1980s, according to the report, which says boosting their number is important to solving the shortage.
But the plans have been put on ice by Michael Gove, who replaced Robert Jenrick as housing secretary last year. He is expected to introduce a watered-down version of the reforms as part of a wider levelling-up package later this year.
“Uncertainty about the future planning system and delays to planning reforms have had a ‘chilling effect’ on housebuilding and created uncertainty for housebuilders and planners,” said the report, which draws on evidence from housing industry groups, charities, think-tanks and academics.
I would say there needs to be more incentives or a push for housebuilders to build then, but given the quality of housing stock they’re producing, I’m not sure I’d wish that on my worst enemy.
It’s classic supply and demand, the demand is good, affordable housing, but FTBs are getting poor to shit, barely affordable housing that may well stray into negative equity.
https://www.bbc.co.uk/news/uk-england-oxfordshire-59882655
I really disagree with a lot of HTB schemes being limited to new builds too.
So as far as the government is concerned it has done the job it was meant to.
We live in the depressing reality where people know housing is too expensive yet the government doesn’t want them to go down because that’ll be unpopular with the electorate. Particularly if ‘negative equity’ starts appearing in news headlines as it will hurt those who’ve bought recently the most (esp. first time buyers).
No shit! It bolstered demand while doing absolutely nothing about supply issues. Anyone who knows anything about economics will tell you that will only have one outcome.
So you’re telling me that enabling more people to buy a limited resource ***increased*** the price?
Shocking.
A scheme to help people into homes would be one thing, this is a scheme to help people into and overinflated *investment vehicle.* We really need to sort out our attitudes to bricks and mortar, but that’s a journey you wouldn’t choose to start from here.
Is anyone surprised? Demand goes up, supply is constrained and costs are rising. It is predictable that this will have an inflationary effect on house prices.
Home owners benefit from this, Landlords benefit from people who cannot buy their own houses, and the Tory party would represent these interests.
IMO its working exactly as designed.
Surely though the cost of new builds is also a problem. Where I live an old 40s/50s/60s mid terrace is a good 30-40% cheaper with a much bigger garden than the new builds which have slightly smaller bedrooms and kitchens and a tiny garden.
Don’t get me wrong you won’t have the problems that might come with an older house but it still doesn’t warrant the extra money.
You’re telling me first time buyers, that have never owned property before, with their suppressed incomes, the ones being complained about for buying too many lattes & avocado toast… *they* are the ones that caused an exponential increase in house prices?
✉️📄 *BLUFF*
Its not a bug its a feature and doing what is was supposed to do. The Tories have ZERO interest in fixing the problem…
Same with stamp duty holiday, such a stupid idea that only assisted those who already had houses and raised the prices for first time buyers who weren’t paying it anyway.
Yup, and openly exploited by some Tory MPs like that cunt Peter Bone
[https://www.mirror.co.uk/news/uk-news/tory-mp-wife-used-taxpayer-7449766](https://www.mirror.co.uk/news/uk-news/tory-mp-wife-used-taxpayer-7449766)
A quick-fix solution to a difficult problem had unintended consequences? Who would have thought.
Now back to nationalising energy & railways, oblivious to any negative side effects.
We need first time buyer locked properties and we need them now. I.e properties that cannot be bought by anyone other than a first-time buyer. Not a renter, not a pensioner, not a council, not a developer. 100% first time only. Let them get on the ladder, build equity and transfer to a new first time buyer.
That’s probably not a perfect solution, but I don’t see us stopping people buying multiple fucking houses in the coming century so…
Housebuilders would be more incentivised to build out the homes they have planning permission for if:
A) planning permission would expire sooner, with penalty fees for excessively delayed building
B) covenants to limit or outlaw rental for X years after being built
C) Rental market caps. With less landlords willing to pay over the odds to build their little nest eggs, and with the rental market lowered the needed fall in house prices could only be met by building more homes to actually sell.
For arguments sake on rental caps, have landlords be required to pay for a 10 year license to operate which includes a house valuation fee per property. This is used to set the cap fair for each local area. You then have the carrot of license removal for bad landlord practises.
D) Land turned over to councils earmarked for housing that is unfulfilled after X years. Councils can choose to build themselves or likely sell the land again.
Shoulda been called “help the rich to sell for more money”.
Tory policies are always going to be for the benefit of the rich, it’s what Tories do.
and 7 times ones salary in places, the foundations of our economy……..
So the Conservative government squandered £29bn of public money on Help to Buy like they did with the £37bn on Test and Trace and now workers are to be hammered with tax rises in April.
Painful though these tax rises will be they only raise £12bn per year so that puts into perspective the amounts squandered.
And let’s not forget the £23bn spent annually on housing benefits which largely go to private landlords charging high rents.
It’s hard to imagine how a government could have failed more in housing policy.
Why don’t they do a help to build scheme instead?
Sat round the table yesterday having dinner with a few folk. All homeowners, all earning combined households above let’s say 40k.
Me and wife – big help from our parents. Host and partner – big help from parents. Other couple – help from parents, took on a lodger for a bit, inheritance.
And we’re sitting there over dinner saying how lucky we are compared to everyone else.
The tipping point is coming soon and it’s a fucking disgrace that it’s easily been avoidable all this time by governments who think getting folk on the property ladder should be an afterthought to 4 bedroom shitty built new builds.
We shouldn’t be saying we’re lucky. Situations like ours should be the outlying on the opposite end of the scale and everyone should be able to afford a property without the massive deposits.
I’m probably more fortunate than most as I managed to buy last year. Prior to that we were looking at houses in Chelmsford, which is quite a nice town for 250k. Obviously we got priced out quickly.
We managed to buy a house in Basildon for 270k. Fucking Basildon. 270k?! Why do I have a feeling I paid too much and it’s going to bite me in the arse?
Well duh.
It just extended the price curve on the demand side, in the same way that low interest rates do.
i mean, that’s obvious though right? By having banks give loans designed to enable the purchasing of housing at all time highs, you just perpetuate the sale of housing at all time highs…
did people really think that loans would ***lower*** the overall housing market cost?
When there’s a shortage housing will always cost the most people can afford, if they make it more affordable the price goes up to match.
So it worked.
Making the boomers singular asset worth more and helping the tories get re elected.
Ever since the “lesson” of John majors loss in 1997 every political party in England has vied to pump House prices. Without fail.
Lots of people in here saying it’s a supply-side problem (and rightly so).
But as a planning consultant, nobody wants homes being built near them.
So what’s the answer?
A colossal £30 billion failure to tackle the problem that ALSO managed to over-inflate the cost of housing for an entire country.
Gold-plated butt-plugs have been awarded all around.
What amazes me about the last 12 years is how there’s always another new level to achieve in peak-Toryism. It is the largest pile of stinking political crap in the Western world at this point and I’m including Trumpism here.
I’ve been looking at one of these type of homes and all I hear about is horror stories of the government loan you get as part of it and people not being able to pay it back and then can’t afford it when it’s gets lumped into the mortgage after 5 years.
When I went to speak to the sales agent I knew more about how the scheme worked then they did, I looked for 5 minutes on their website before I went to speak to them. Really put me off and I actually want to move.
This is like how when I drink 10 G&Ts, I’m suddenly drunk and have no idea how it happened. I wonder what could explain these strange occurrences…
My wishlist in terms of policy:
* The abolishment of new leasehold properties. The new standard to become commonhold, and all leasehold property owners have an automatic right to transition to commonhold as a stakeholder in the overall building, proportionate to the number of flats in the building. Example, if a company owns 9/10 flats to rent and you own 1, you have a 10% stake in the building.
* Corporate entities are not allowed to purchase residential property. Only individual humans (and married couples) can buy residential property, and corporations are not individual humans. Existing companies with portfolios are given 15-20 years to sell and find a new means of income.
* Abolish mortgages that require below 10% as the deposit
* Eliminate right-to-buy for council housing
* Introduce a new tax for second homes based on the value of the property and the need of housing in the area.
* Ban the purchase of residential property by foreign investors that haven’t lived in the UK for a combined 5 years or more.
In terms of wooly ideas, the goal should be to keep house price growth to a minimum, only growing enough in value to make up for the interest on the loans taken out to buy them. The focus should be on empowering unions and making sure salaries increase faster than house prices. That way, nobody goes into negative equity, and new salaried workers can actually catch up.