i Editor's Letter: Osborne's Help to Buy plan and its many frailties
Oliver Duff was appointed Editor of i in June 2013. He was previously Executive Editor at The Independent, i and The Independent on Sunday, running the newsroom. Formerly a reporter, gossip columnist and news editor, he was fired as the magazine's bar critic after three weeks. A diver and surfer, he's interested in nature and science, politics and diplomacy.
Wednesday 24 July 2013
You can see the appeal for George Osborne. Attach jump leads to the housing market in the hope that it kickstarts home building – and precious economic growth. His previous attempt this year worked: offering state loans for new-build homes has helped to boost mortgage lending to a 17-month high.
Then there are the millions of people trapped into renting well into their 30s, 40s and beyond – it’s crushing when the landlord takes your disposable income each month, the day after payday. So this is a tantalising offer, ahead of a general election: own a home, with just a 5 per cent deposit.
The Chancellor is gambling, though, with his ambitious Help to Buy plan, part-guaranteeing £130bn of low-deposit mortgages. He could create demand without supply, raise house prices, wrest home ownership even further from the reach of Generation Rent, and create a new bubble. More needs to be done, too, to stop buy-to-let landlords taking advantage.
Mr Osborne needs to be clear about the Government’s exit strategy from Help to Buy, lest the housing market become hooked on state aid and prices then plummet, with devastating consequences for those trapped in negative equity. Good luck to him.
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