By Rob Stafford
Help to Buy aids 220,000 purchases
Statistics released by the Treasury at the tail-end of 2016 reveal that more than 220,000 have gained access to the property ladder as a result of the government’s Help to Buy (HTB) scheme.
Of those, 180,000 were first-time buyers taking their first steps on the ladder. There’s also some much-needed relief for beleaguered millennials, with the median age of a first-time buyer in the scheme just 27, a 3-year head start on the median age of 30 for first-time buyers nationally.
It’s good news for capital too, London HTB helped some 1,500 Londoners onto the ladder between February and September 2016. The capital exclusive scheme offers an equity loan of up to 40 percent for first-time buyers with a 5 percent deposit.
As for a breakdown of how the schemes comprising HTB are faring; the HTB Isa has been used on more than 27,000 purchases since its introduction in December 2015. Meanwhile, over 100,000 people used the Help to Buy Equity Loan scheme, which provides buyers with up to 20 percent of a newly built home’s costs (leaving them with only the 5 percent deposit to find).
Finally, while the popular mortgage guarantee scheme ended on New Year’s Eve, HM Treasury noted that several commercial lenders will continue to offer 95 percent mortgage products into 2017. Alongside this, the government unveiled plans to offer a new mortgage product, the Lifetime Isa, in the new financial year.
When asked about the scheme’s success Chancellor Phillip Hammond said: “Our Help to Buy schemes are helping hundreds of thousands of people, especially first time buyers, achieve home ownership. We are continuing the popular Equity Loan and Isa schemes to ensure people can access support when buying or saving for a property. We are determined to help make home ownership a reality for hard-working people.”
So far, so peachy, however, HTB is not without its limitations. The greatest of which, is its failure (in the short term at least) to convincingly address the shortage of affordable homes in the capital. While the 1,500 new homeowners as a consequence of the London program are commendable, it’s unlikely to make a dent in the numbers leaving the city in search of affordability (more than 280,000 in 2015, with a large proportion of those thirty-somethings).
Furthermore, it cannot be ignored that the highest proportions of purchases were in regions already known for more reasonably priced stock. Namely; the North-West, South-West, Yorkshire and the Humber. Which is not to say that the need isn’t valid in these regions, more that the need is certainly more acute in London and the South East. To give an example, the average house price in London (as of the last quarter of 2016) is £470,000, the price in Yorkshire and the Humber? Just over £178,000.
Without being too cynical, it’s difficult not to harbour the sneaking suspicion that the scheme may be better geared towards easy wins (and the resultant political capital). Rather than the sweeping social change that is its mission statement.
So, while the inroads made by HTB in 2016 are welcome, it needs sharper focus upon the regions in most desperate need of affordable housing. Namely, the South East, take the city of Oxford as an example, first-time buyers battle house prices 16 times average earnings. Yet, according to an Oxford Times article penned in April 2016, in the first two and a half years of HTB, not a single home was sold under the scheme.
If the government is to convincingly address the housing crisis, then more tangible progress needs to be made in the high density, high demand and expensive boroughs of the capital and its commuter belt. It is these areas who suffer most acutely from an astronomical rental market, high demand for property and spiraling house prices. To fail them is to undermine the success of the scheme on a national scale