Today’s Sunday Times has news which would be laughable, if it were not to plausible. That George Osborne intends to pour some more petrol on the property market fire next week by extending his discredited Help To Buy equity loan scheme – in effect, a flagrant example of politicians using taxpayers’ money in an attempt to buy votes. It’s a sign that Osborne intends to use help-to-buy as an election weapon, and as loaned money doesn’t show up on the deficit figures he’s quite relaxed. Here’s the start of the Sunday Times story:-
The Help to Buy scheme, designed to help people get on to the housing ladder, is likely to be extended in this week’s budget. George Osborne is expected to frame his budget around improving the lives of working-class voters in marginal Conservative seats by helping them to buy their own homes and pay less tax. The chancellor is tipped to increase the personal tax allowance to £10,500 and also to extend the Help To Buy scheme beyond 2016. Under this equity-loan programme, the government offers buyers of newly built homes that are worth up to £600,000 a loan of up to 20% of the value of the property. The loan is interest free for five years.
Help to Buy was brought in so Osborne could lend taxpayers’ money to people to whom the banks would not lend (usually because they were deemed too large a credit risk – that’s why help-to-buy is dubbed right-to-default). That was when 95 per cent mortgages were a rarity. Now they’re everywhere, the housing market is booming, and from Cumbria to Chelsea you’re seeing valuations as heady as they were at the peak of the last bubble.
Britain’s property market – new-build or not – does not need help from the taxpayer. Rather, Osborne should be worrying about it overheating and thinking of ways to cool it down.