It seems not a day goes by without a major housing story during the political parties conferences!
Sadly there seems to be very few new ideas on how to solve the housing crisis.What ideas the parties are proposing shows a distinct lack in many cases of understanding of how residential property works.
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Worst still, I can’t believe that for something so important as housing, parties are choosing wholly inaccurate figures to justify their ideas and policies. Labour are quoting daft statistics on rent rises and Cameron is claiming the average cost of a house is £200,000 and you can only buy if you have a £40k deposit, suggesting no 95% mortgages already exist and ignoring initiatives such as shared ownership. |
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Misquoting statistics is one thing, but setting policies of flawed figures, is unforgivable in my view.
For more information about how Help to Buy works read our articles:Help to Buy Scheme and
Help to Buy - the pros and cons
Why bring help to buy (HTB2) forward?
Whenever markets are interfered with, there are usually two reasons behind it: politics or economics.
I think HTB 1 & 2 was introduced in the main to help drive the economy forward – and to be fair the new build scheme has worked. Help to buy itself has brought huge confidence back not just into property, but also generally from a personal finance perspective. From April 2013 to date, the GFK confidence index has risen dramatically, especially confidence for large purchases. And this has coincided very much with ‘good news’ about property prices and the market.
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Demand for property to buy has risen with new build sales estimated to be up by 30% this year. Developer's shares have improved which means they can buy more land and prepare to build more in the future. Although building is still a long way off from long term norms, it’s still better to be moving in the right direction. |
With HTB2 now being brought forward, economically this will help to drive sales through to Xmas when the market normally goes quiet and is likely to make for a busy January too. An even better consequence of introducing the scheme early could be encouraging owners of existing homes to want to move and put their properties on the market. Prices are rising this year as demand has increased, but hasn’t been matched as yet with an increase in supply (generally speaking). So hopefully supply will go up and help match demand for homes, so more people move, but prices remain level.
However, the big question is whether funding for buyers will be available as Andrew Montlake, Director of Coreco a and sponsors of our property checklist Financing a Buy to Let explains:-
"This is an extraordinary announcement by the government, especially as one of the biggest issues with part two of the Help To Buy scheme was that there was some concern whether lenders would be ready to introduce the scheme in January, let alone October. It will be interesting to see how many lenders will have the systems in place or the scope to cope with increased demand so soon. At least this move will have put an end to fears that activity would dry up towards the end of the year as buyers waited for the scheme to commence in January".
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