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Is Help to Buy really helping?

December 15, 2015

 

 

Getting a financial step-up to purchase your own home sounds like a great idea. Yet there are those who would argue that assisted purchase schemes are simply building up problems for the future.

 

Our national love affair with home ownership shows no signs of dwindling. Nowadays the trend is spurred by soaring rents as housing demand continues to outstrip supply.

 

Years of missed targets when it comes to building new dwellings has pushed rental costs up by 36 per cent since 2008, according to Office for National Statistics (ONS) figures. Meanwhile house prices fell slightly last month.

 

Given these competing and sometimes confusing factors, I’m not surprised that politicians were lining up to comment on the Welsh government announcement that up to £290m will soon be going into boosting the housing market.

 

‘Help to Buy Wales’, an assisted purchase scheme, aims to support construction of more than 6,000 homes by 2021.

 

Buyers who can raise a 5% deposit receive an interest-free loan of up to 20% on the price of a newly-built property, up to a value of £300,000.

 

Labour ministers stated that 1,800 households had already benefitted since the scheme was launched in 2014.

 

Conservative reaction was that Labour had "listened to pressure”. Plaid Cymru welcomed the news but wanted a "broader strategy” while Lib Dems complained about a “complete poverty of ambition" in building enough affordable homes. Situation normal.

 

Although undoubtedly popular with political parties, house builders and estate agents, there are nonetheless industry watchers – plus one or two insightful AMs – who hold the view that Help to Buy should come with its own health warning.

 

Few people have a problem with the equity loan element; other than a bunch of disgruntled would-be lenders.

 

On the other hand there’s growing uneasiness among housing economists that mortgage guarantees enabling 95 per cent borrowing could simply be a means of storing up trouble for the future. Some go as far as to argue that schemes will artificially boost demand thus creating a house price bubble that could end in tears.

 

It’s true that Help to Buy works a treat in times of low interest rates and near-dormant inflation. Things become different when rates go up and assets quickly become liabilities. But it’s one thing though to state the obvious and quite another to claim that state-subsidised mortgages will have the same impact as the notorious sub-prime mortgage scam which fuelled economic collapse seven years ago. 

 

Research by the Building Societies Association suggests first-time buyers find raising a deposit now less of a problem than six years ago as economic growth slowly makes itself felt - although it is still by far the biggest single challenge they face.

 

The construction industry sees things a little differently. Many house-builders believe there are a number of measures which the Treasury could put into effect to unlock the affordable housing market.

 

As things stand however, assisted purchase remains the front runner in terms of boosting recovery.

 

In other words, it may not be the most sustainable game in town, but it’s the best one around for the moment.

 

 

 

Climate challenge begins at home

 

Whatever your views about the cause of climate change, you have to admit that assembling representatives from nearly 200 countries in one place to discuss the matter is quite a feat.

 

Actually striking a deal – the first of its kind – to commit all nations to cut emissions is nothing short of incredible.

 

It hasn’t taken long for the cracks to show however. Domestic critics grumble that very little of the deal is binding and will be breached by the world's poorest countries,

 

But it’s worth noting that the Westminster government itself has done nothing since the UK Supreme Court ruled ministers must take immediate action to cut air pollution.

 

That was back in April when campaigners won a legal action after the UK repeatedly breached EU limits for nitrogen dioxide (NO2), which is linked to a range of respiratory illnesses.

 

Clearly the job of cleaning up the planet begins at home.

 

 

 

No laughing matter

 

I once visited a New York restaurant which had clever sayings printed on the napkins.

 

Mine read: “Why we don’t we take politicians seriously?  Answer: It’s called ‘returning the compliment’”.

 

That rationale came to mind as I read the latest verbiage uttered by billionaire and would-be US president Donald Trump.

 

At the time of writing, the petition calling for Trump to be refused entry to the UK has reached 552, 514 names – my signature is among them. It only requires 100,000 for MPs to debate the matter.

 

As much as I’m taken with the conspiracy theory that he’s actually a Democrat plant thrown into the Republican camp to sabotage their presidential chances, I think the man is dangerous

 

With his jutting jaw and manic arm-waving, he comes across as a laughable modern-day Mussolini. The trouble however, as happened with Mussolini, is that the day comes when the laughing stops – and by then it’s too late.

 

 

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