Commerce has set the mark of selfishness,
the signet of its all-enslaving power, upon a shining ore, and called it gold:
So the question about what happens when we get to the end of HelpToBuy has been answered – the Government is going to continue with it.
Chancellor George Osborne announced on the Andrew Marr BBC TV show on Sunday that the first part of Help to Buy, that which is purely for new build properties, will run to the end of this decade instead of coming to an abrupt end at the end of December 2016.
Hooray. Hooray especially for housebuilders whose shares suddenly took flight when the announcement was made – Persimmon’s by 6%.
Help to Buy is an equity loan scheme, which means buyers can put down a deposit of just 5% on a new home, and take out a mortgage of up to 75% of its value. The difference is made up with an equity loan of up to 20% from the government.
It came about when the mortgage-industry suddenly ran scared and refused to even consider lending anyone anything more than about 80% of a property’s value. Small wonder really, when you consider the mess that over-zealous lending in the years leading up to the collapse of Northern Rock, the bail-out of the banks et al left us all in.
And you know what? It worked. It bloody well worked. Certainly this bit that boosted confidence in and amongst housebuilders so much that bricks and blocks became as rare as hens’ teeth as stalled housing projects ramped up and suddenly stock shortages were the thing to grumble about.
Of course, those of us who’ve been through this all before knew that availability was always going to be a problem once things picked up again and canny merchants started stocking up in early 2013. Which probably meant that there was plenty of stock in some yards, just the wrong ones.
I digress. Osborne is clearly feeling pretty pleased with himself at the success of his scheme which is why he’s decided to extend it. Does he really have to look so unbearably smug all the time?
Of course, the cynic in me wonders whether he’s actually feeling the chill wind of a none-too-certain election result whistling round Number 11 and that that is why he’s decided to announce its extension before rather than after the next election.
There’s been no announcement about Help to Buy part 2, the mortgage guarantee scheme which covers ‘second-hand homes’, ie. not new builds which is still due to finish in December 2016.
I think on the whole, that letting Help to Buy 2 phase out is probably a good thing. I’m pretty sure that it’s one of the things that has helped to fuel a rise in house prices in certain areas. As I’ve said before, if we let house prices rocket then all the government schemes in the world won’t help if even a 5% deposit is way over the affordability for a whole stratum of society.
We need to encourage housebuilding in order to get anywhere near filling the gap between the houses we have and the houses we need. More houses built equals more houses for sale which, as long as the housing market follows the simple laws of supply and demand in Economics 101, might temper house prices.
Hmm. Maybe not.