An article which needs to be read in full.
“… Osborne played his get-out-of-jail card: he chucked money at the British housing market. He launched the help-to-buy scheme, billed as aid to first-time buyers, giving them government equity loans of up to 20% of the purchase price of any new-build. The likely consequences were obvious from the outset. Osborne’s plan would chuck a canister of petrol on to house prices. The chancellor who slashed billions from social security for the working poor had no problem whatsoever with handing billions to property developers.
It was cynical, it was costly; it was Osborne all over. And for the property sector – the mortgage lenders, the estate agents and most of all the housebuilders – it was what industry expert Henry Pryor calls “crack cocaine”. It kept the market bubbling over, underpinned prices and brought in massive profits. And like the addicts of cliche, the property industry kept demanding more. Housebuilders have repeatedly lobbied for the scheme to be extended and expanded. Again and again, Osborne and Hammond have obliged. What began as a three-year programme worth £3.5bn will now run until 2023 and suck in more than £29bn of taxpayer money.
In Austerity Britain, this may be the single biggest giveaway to one small group of businesspeople – and it gets barely any attention. The scheme may have helped some first-time buyers on to the ladder, but by inflating prices, it has kept many others off. Add to it quantitative easing and the erosion of stamp duty, and the British state has looked after housebuilders like no other. …”