It was launched by George Osborne in 2013, which is probably enough to tell you that it was a bad idea. But Help to Buy took a long time to die.
The government scheme to lend up to 40% of the cost of a new home to first-time buyers was finally allowed to wither on the vine and ended earlier this year. Quite amazingly the government is now considering restarting the scheme, which is strange because it has been a very expensive, stupid, failure.
In 10 years, Help To Buy lent £23.6 billion to homeowners, interest-free. This was money that could have been used to actually build houses or pay nurses, but what did we get instead for our money? We got a huge surge in house prices, but house-building levels have not even got back to the numbers seen in the 1990s and 2000s.
If you don’t increase the supply of something but give out tens of billions in free money to stoke demand, prices rise. House prices have soared by 73% since the scheme was introduced; inflation generally has pushed prices up just 30% in those ten years. No wonder house builders love it, they are getting more and more for the same properties.
Since it was the ever-increasing price of housing that was the initial problem, the chancellor developed a policy to throw very expensive petrol on the flames, paid for by taxpayers, many of whom can’t afford to buy a home.
Meanwhile the Tory government has gone through housing policies quicker than it has gone through prime ministers (which is saying something) and has achieved nothing. Beset by its own incompetence, and the fact that many of its voters are dyed-in-the-wool NIMBYs, it has lurched from one inadequate response to another.
The result is the ability of the young to get on the housing ladder has got far, far worse, the winners have been existing homeowners and buy-to-let owners. Both have seen the value of their property increase, while the desperate need for people who cannot buy to rent has pushed up rental prices too, a nice bonus for landlords.
The elephant in the room is, of course, the right to buy. Just another Thatcherite policy with disastrous long-term consequences. Designed to increase home ownership, it has had the opposite effect, home ownership is declining and has been for decades now, while it also managed to destroy much of the nation’s social housing as well.
Councils had no incentive to build something they were going to have to give away at a loss and although private house building has stayed fairly steady for decades, council house building stopped in the 1980s and is now almost non-existent.
The answer is a housing policy that builds homes – and hundreds of thousands of them a year – and which incentivises councils to re-enter the market. Maybe insisting that two-thirds of new council-built homes would be for key workers and not for sale would help, or letting tenants pay half council rent and half mortgage, as many housing associations do. This gives them half the rise in value when they move on, providing them with a deposit on a private property and the council with the house back to rent out again.
But just throwing billions of pounds of taxpayers’ money at first-time buyers is a complete waste of time and money, it will make the situation worse again, but it might be popular at the polls.
So, guess what we will get?