Skip to content

Home builders praise flagship Help to Buy scheme

House builders in the UK have praised the Government’s flagship Help to Buy scheme and point out that it is delivering on all objectives as well as helping the industry to create more jobs.

The Home Builders Federation (HBF) has spoken out at a time when the policy has come under threat with some experts saying it should not be continued beyond 2021.

However, the HBF says that it should be lauded. It points out that housing supply has increased by 74% and the value of Government investment is up an estimated 10.5%, around £1 billion and 150,000 jobs have been supported and sustained due to extra supply.

The analysis show it has achieved all the targets specified at launch, namely to increase home ownership, increase housing supply and generate economic activity. The report reveals that;
170,000 homes were purchased through the scheme between April 13 and March 18. Of these more than four out of five were bought by first time buyers.

In total it is estimated it has enabled some 246,000 individuals get on to the housing ladder. Despite claims from critics, the scheme is helping those it was set out to. In 2017 the median household income for those using the scheme was £49,000.

There is no evidence to suggest that the market could support high loan to value mortgages should the scheme be withdrawn, with just 3.3% of new lending in the first quarter of 2018 at 90% or above, it says.

Since the scheme launched housing supply has increased by an unprecedented 74%, the fastest increase on record, to supply levels last seen in the 1950s. Planning permissions, a strong indicator of future supply are up 88% over the same period.

Whilst transactions in the wider housing market remain subdued, down 21.4% on 2006 levels, activity in the new build market continues to rise. New builds now account for almost 15% of mortgaged housing market transactions compared to a long term average of 8.2%.

The value of the Government’s Help to Buy equity loan book has increased significantly and is still rising. The report estimates that the £8.9 billion the Government invested over the first five years of the scheme could now be worth £9.8 billion, an uplift of 10.5% or as much as £935 million.

The 48,000 homes sold through Help to Buy last year helped sustain an estimated 150,000 jobs. On an annual basis, the additional house building activity is estimated to provide or fund 20,000 affordable homes, generated £1 billion in tax receipts, contributed £73 million towards education vis Section 106 taxes, enough to provide up to 34,000 classroom spaces.

Unlike previous attempts at such schemes, Help to Buy has been accessible to builders large and small, with over 3,000 companies, the vast majority of them small local builders, now registered, it also points out.

And the report also demolishes critics’ oft made claim that the scheme has driven up new build house prices and demonstrates that the respective increase in price between new builds and second hand homes is remarkably consistent. While new build prices have always traditionally been slightly higher than second hand properties, that may not come with new appliances and may require remedial work, the rate of house price growth for new build properties continues to mirror price rises in the wider housing market.

‘It is quite clear that the Help to Buy scheme has been an unmitigated success and has delivered handsomely on all its objectives. It has enabled hundreds of thousands of people to realise their dream of owning a home, the vast majority of whom are first time buyers on average incomes,’ said Stewart Baseley, HBF executive chairman.

‘It has led to an unprecedented increase in house building activity, created tens of thousands of jobs and boosted local economies the length and breadth of the country. The Government should celebrate its success and use the hard evidence now available to rebut the claims of its critics,’ he pointed out.

‘As we look to tackle our acute housing crisis and deliver on the Prime Minister’s target to build 300,000 homes per year the scheme has a key part to play. Government should reflect on the huge impact the scheme is having on individuals keen to realise their dreams of home ownership, on housing supply and on the wider economy,’ he explained.

‘House builders continue to invest in the land, materials and people needed to deliver furthers increases in supply confident in the demand Help to Buy is underpinning. Certainty moving forward is now required to enable the increases in housing supply, and the associated social and economic benefits, to continue,’ he concluded.

Topics

Related