Help to Buy will help the haves, not the have-nots

There is no evidence that Help to Buy has stimulated more house building

(Getty Images)

Would you like to own a rather wonderful five-bedroom country property with period features, stables and a detached holiday cottage set in 3.5 lovely acres? Of course you would. Not to mention that, if you have only £30,000 for a deposit, the Government is prepared to guarantee £120,000 of the loan you will need to buy this £600,000 dream house. Yummy.

But hang on. Why should the Government be doing this? And can it be morally right for people who are well off enough to afford to repay a £550,000 mortgage to accept a guarantee underwritten by taxes paid by people who can’t afford to buy at all, or even to rent a place of their own?

Naturally it didn’t take long for estate agents to wake up to the marketing potential of David Cameron’s announcement at the Conservative Party conference last Saturday that Help to Buy would be extended to the second-hand market this month instead of next January. The day after he made it, traffic to the Help to Buy section of Rightmove, the agents’ leading portal, leapt from 14,000 to 60,000. The website explains the entitlements precisely to agents as well as buyers, and Help to Buy is already featuring in many property advertisements.

Mortgage lenders are also cheerful. Santander reports that 10 per cent of people plan to move in the coming year, and that a third of them will take advantage of Help to Buy, allowing them to lend virtually without risk. Yippee.

The economic insanity of Help to Buy is well rehearsed. Everyone from the IMF to Sir Mervyn King warns of the risk of inflating the housing market by a further £12bn. There is no evidence that the Government’s stated purpose for Help to Buy, which is to stimulate the building of more homes, desperately needed to relieve the housing crisis, is materialising.

It is a truth universally acknowledged that more money chasing restricted supply will lead to price rises and, unlike those elusive new homes, they are already with us. The Government wants to be seen denying it’s causing a “property bubble”, but is secretly pleased – as all previous governments have been – because the majority of voters are home owners who can see no further than the next dinner party chatter about how the value of their house has gone up, praise be.

Help to Buy is as morally bankrupt as it is economically. The guaranteed winners in the £12bn stakes will be estate agents, mortgage lenders (aka banks), developers and well-off home buyers.

The losers will be those hard-working families politicians are so fond of prattling on about, who pay taxes but are struggling to pay the rising cost of everything else. They will have to grit their teeth as their hard-earned tax money enables people far richer than themselves buy homes they can only dream of.