The introduction of the Help to Buy scheme was the only very small bone of contention in this year’s successful Budget (successful politically, that is, in that no-one talks about it a month and a half later). The announcement itself was a political win for Communities Secretary Eric Pickles, who believes that the only problem left now is access to credit, over those in the Treasury who had, at one point at least, hoped to re-open the debate about planning regulations in order to increase supply.
It is too soon to tell, of course, whether the scheme itself will be a roaring success: it only celebrated its first completion a week or so ago. But today’s warning from Fathom Consulting, reported by the Times, highlights the risks that a successful Help to Buy could pose for the wider housing market.
The consultancy, run by former Bank of England economists, warns that the scheme could push prices up by almost 30 per cent. This was something those with a good understanding of the housing market such as Kwasi Kwarteng warned shortly after George Osborne announced the measure.
This whole story would be far less worrying, though, if the Coalition’s planning reforms looked as though they might dramatically increase the supply of homes. If this country were on track to build 250,000 homes a year, then Help to Buy wouldn’t be a threat. But the dispiriting thing is that, as I reported last week, while those at the top aren’t convinced the current planning settlement works, they’re also not convinced they can make any further reforms to it until after the next election at least.
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