Tue. Jan 18th, 2022

The government’s £ 29 billion Help to Buy Schedule has pushed up house prices in England and failed to “provide good value for money” for the taxpayer, according to a House of Lords report published on Monday.

Cash spent on the scheme could have helped replenish England’s declining supply social housing, said the report writers, who sit on the Lord’s building environment committee.

The “scheme, which will cost about £ 29 billion in cash terms by 2023, inflates prices by more than its subsidy value in areas where it is most needed… This funding will be better spent on increasing the supply of housing,” according to the report.

Help to Buy is designed to boost home ownership by providing an equity loan to buyers. However, it has been criticized as a developer subsidy that does little to address the shortcoming truly affordable housing.

The stock of social housing has shrunk by nearly 500,000 homes since 2000, according to an analysis of official statistics by the charity Shelter.

“Help to Buy had its virtues, especially outside London. But in London and those hotspots of demand, it went straight up in price. That was the problem, “said Baroness Neville-Rolfe, chairwoman of the committee.

Graph showing the changing source of housing supply

Nearly 340,000 homes have been bought with the share loan since Help to Buy was launched in 2013, the vast majority by first-time buyers. During the same period, the share price of leading builders, including Persimmon, Barratt Homes and Taylor Wimpey nearly tripled.

Developers are defending the scheme, saying it has helped increase the number of homes built and broadened access to them. “Since its launch in 2013, Help to Buy has been the biggest contributing factor in doubling housing inventory,” said David O’Leary, policy director at the Home Builders Federation, an industry body.

The scheme now pays dividends to the Treasury, he added, “with a yield of about 10 per cent of the 70,000 equity loans already repaid in full by homeowners”.

The Lords Committee put forward a number of proposals to address the national housing shortage, and called on the government to reform the planning system, support small builders and divert funds to new social housing and construction worker training.

In August 2020, the government published a white paper setting out the ambitious plans aimed at simplifying the Byzantine, often sclerotic planning system. It would have been a blessing for small and medium-sized developers, who struggle to navigate the long, expensive planning process.

SME builders are responsible for just 10 per cent of new housing built in England today, down from 39 per cent in the late 1980s, according to the report, which says it is important to increase their numbers to solve the shortage.

But the plans were put on hold by Michael Gove, who replaced Robert Jenrick as housing secretary last year. He is expected to launch a watered-down version of the reforms later this year as part of a broader leveling package.

“Uncertainty about the future planning system and delays in planning reforms have had a ‘cooling effect’ on housing construction and have created uncertainty for homebuilders and planners,” the report said, relying on evidence from housing industry groups, charities, think tanks and academics. .

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