Tuesday, 15 October 2013

Help to Buy - Cameron's expensive & risky pitch to Tory heartlands?

I wrote in a piece in the Guardian last week about the geographical impact of the Governments Help to Buy scheme.

Particularly concerns regarding the generous allowance and the disparities in house prices around the UK. Many of my concerns were confirmed today with the answers to some of my recent Parliamentary Questions on the subject.

In short, the responses received from the Minister avoided addressing the issues I have raised. In my view the Government has either or both - no interest - no intent - to ensure that their Help to Buy scheme does not end up simply being used on very high value properties in the south and London. It should not come as a surprise. The government raised the ceiling on what is essentially a rebadged and greatly extended Labour government scheme from £280,000 to a Tory friendly £600,000.

In 2011 the government introduced the New Homes Bonus scheme which also resulted in the bulk of Treasury funding finding it's way to the leafy areas of London of the South.

So even when a Tory led government seeks to intervene in markets, they plan it in such a way that a significant amount of money is swallowed up on £600,000 properties, or in the overheated London market, or by people looking to bump themselves up the property ladder.

Graham Jones: To ask the Chancellor of the Exchequer if he will ensure equal regional allocations of funds available through the Help to Buy Scheme. [170182]

Sajid Javid: The Government is committed to making the aspiration of home ownership a reality for as many households as possible. The Government wants current and future generations to experience the benefits of owning their own home, in the same way their parents were able to.

Since the financial crisis, larger deposit requirements and falling equity values mean many credit-worthy households cannot get a mortgage, or are, trapped in their existing homes unable to take the next step.

Budget 2013 announced the Help to Buy: mortgage guarantee scheme to increase the supply of low-deposit mortgages for credit-worthy households.

The Help to Buy: mortgage guarantee is available on mortgages on homes across the UK. The Government has made £12 billion of guarantees available, which is sufficient to support £130 billion of high loan-to-value mortgages.

Decisions concerning the availability of mortgages, including the regions lenders offer mortgages to, remain commercial decisions for individual lenders participating in the scheme.

Graham Jones: To ask the Chancellor of the Exchequer whether he plans to limit the number of Help to Buy guarantees which are used to purchase property mortgages between £500,000 and £600,000 in value. [170183]

Sajid Javid: On 8 October 2013, the Chancellor and the Prime Minister announced that borrowers can start benefiting from the Help to Buy: mortgage guarantee scheme and published the final scheme rules.

The Government is committed to making the aspiration of home ownership a reality for as many households as possible. The Government wants current and future generations to experience the benefits of owning their own home, in the same way their parents were able to. Since the financial crisis, larger deposit requirements and falling equity values mean many credit-worthy households cannot get a mortgage, or are trapped in their existing homes unable to take the next step.

The scheme rules set out that for a mortgage to be considered eligible it must, among other criteria, be on a property in the UK with purchase value of £600,000 or less.