Holiday lets poised to open doors in staycations boost

“Private holiday lets, including Airbnb properties, could reopen as early as next month as ministers seek to kickstart the domestic tourism industry….

….”Mr Dowden [Culture Secretary] confirmed yesterday that ministers would also be launching a campaign to encourage Britons to book domestic holidays in seaside towns this summer. He said: “We’re hoping to get tourism back as rapidly as possible, and when it is back we will be investing extensively, ensuring we have a major campaign to encourage British people to take British staycations.”

But will they be “investing” in the local Councils bearing the brunt of clean up costs? – Owl

Ben Clatworthy, Assistant Travel Editor | Eleni Courea, Political Reporter www.thetimes.co.uk 
Private holiday lets, including Airbnb properties, could reopen as early as next month as ministers seek to kickstart the domestic tourism industry.

Oliver Dowden, the culture secretary, said the government’s target was for the sector to reopen by July 4, with self-let properties likely to be among the first to be available because they present a “lower risk” of spreading coronavirus.

Domestic tourism chiefs are hoping for a boom once the lockdown restrictions are eased to allow people to stay overnight away from home.

Campsite and holiday park owners, as well as private rental outfits, have been lobbying the government to allow them to be among the first in the hospitality sector to reopen, claiming they are already set up for social distancing.

The news was welcomed by Airbnb, the world’s biggest private letting platform, last night. A spokeswoman said: “The British summer holiday is back on the horizon and hosts are getting ready to provide accommodation away from the crowds that’s local, private, clean and safe.” At present the website has a booking block on “non-essential” stays until at least July 4, but says it has developed a new “cleaning protocol” for hosts to follow in order to minimise the risk of the virus transmitting.

Mr Dowden confirmed yesterday that ministers would also be launching a campaign to encourage Britons to book domestic holidays in seaside towns this summer. He said: “We’re hoping to get tourism back as rapidly as possible, and when it is back we will be investing extensively, ensuring we have a major campaign to encourage British people to take British staycations.”

Domestic travel agents have said bookings for staycations this summer, starting from mid-July, are looking promising, although September is proving to be the “stand-out month” after a recent surge in reservations.

Mr Dowden also said a proposed new bank holiday in October, designed to boost domestic tourism, was an “excellent proposal”. Experts predict such a move could raise an estimated £500 million for the economy.

He told MPs: “One of the challenges we will have is getting the [tourism] sector up and running as strongly as possible in the summer, and extending it for as long as we can.”

The idea of an extra bank holiday to compensate for the impact of the pandemic was proposed last month by the UK’s tourism agency, Visit Britain.

Its acting head, Patricia Yates, told MPs that the industry had lost the benefit of two bank holidays in May because of the lockdown.

“It’s really important to extend the season, and bank holidays are really valuable,” Ms Yates said. “Having a bank holiday in the October half term would really drive business and remind people that the holiday season is still going and not just ending in August.”

The culture secretary added that he and Rishi Sunak, the chancellor, were “looking at further measures” to support financially hit coastal areas before then. Tim Loughton, a former Tory minister, cited research that workers in seaside towns were being laid off faster than in any other part of the country.

No 10 confirmed last month that the government was looking at the idea of an extra bank holiday but warned that it came with “economic costs”.

Conservatives welcome the “like-minded” Fox back to the fold (watch your backs! – owl)

Councillor Ben Ingham said: “Following the resignation of the Independent Cabinet and the dissolving of the Independent Group, I wish to continue serving our communities throughout East Devon to the best of my ability.

“Without a doubt that is best done through the Conservative Party who will be called upon to help sort out our Local Government recovery efforts to the Covid-19 pandemic.”

So Ben, tell us when you had your “Damascene ” moment that serving the community is best done through the Conservative Party rather than through the “party” you led! (Owl)

Former Independent Council Leader defects to the Conservatives

Hannah Corfield exmouth.nub.news 

Councillor Ben Ingham, who recently resigned as Independent leader of East Devon District Council, has now rejoined the Conservative Group in a bid to ‘help with recovery efforts’ following the Covid-19 pandemic.

Leader of East Devon District Council Conservative Group, Councillor Andrew Moulding, is said to have ‘warmly welcomed’ his return to the group with immediate effect.

He commented: “Ben is a highly respected and valued member of EDDC who I have known and worked with for too many years to remember.

“He brings invaluable experience, knowledge insight and nous to our group, where he will make a valuable contribution to the East Devon community and is a first class ward member.

“As a party we are a ‘broad church of interest’, both locally and nationally. We look forward to welcoming more like-minded members to the group in due course.”

Councillor Ben Ingham said: “Following the resignation of the Independent Cabinet and the dissolving of the Independent Group, I wish to continue serving our communities throughout East Devon to the best of my ability.

“Without a doubt that is best done through the Conservative Party who will be called upon to help sort out our Local Government recovery efforts to the Covid-19 pandemic.

“I look forward to the chance of participating in that and making a positive contribution.”

Coronavirus infections in England and Wales hit peak days before lockdown, study finds

Owl is beginning to see a number of different ways of analysing the pandemic by examining the emerging data as opposed to using “a priori” modelling. Time will eventually reveal the the “truth”. This is an example of the data analysis approach.

“Coronavirus infections in England and Wales peaked several days before the lockdown came in, a new study suggests, indicating that the draconian restrictions were not responsible for the decline in deaths and cases.”

By Sarah Knapton, Science Editor www.telegraph.co.uk 

Modelling by Professor Simon Wood, of the school of mathematics at the University of Bristol, shows that the majority of people who died at the peak would have been infected roughly five days before the lockdown was introduced.

The finding is based on data which shows that the average death from coronavirus takes around 17.8 days from the onset of symptoms, while symptoms appear approximately 5.2 days after infection, making a total of 23 days.

Deaths in England and Wales peaked around April 8-9, which suggests the majority of people who died then had become infected roughly 23 days earlier, around March 18-19. 

Full lockdown in the UK did not come into effect until March 25. However, in the week before, social distancing measures were already in place and many people had begun working from home. Large public gatherings had stopped and bars, restaurants and theatres were starting to close. 

Prof Wood said: “It does seem possible that the social distancing that was happening before full lockdown might have done the trick.

“My results simply suggest that if you do not make strong assumptions about what happened, then the data tend to suggest a peak a few days before lockdown.” 

He said it was difficult to be completely sure when infections peaked in Britain because community testing was stopped in mid-March so there was no data from early in the epidemic.

However his analysis also showed that Sweden’s infections peaked just a few days after Britain, even without full lockdown being imposed in that country. The German reproduction ‘R’ number was also estimated to have fallen below one before full lockdown. 

In the work, published on the open access research site arXiv, hosted by Cornell University, Prof Wood said the results had ethical implications for keeping lockdown in place or reinstating it later in the year because it could have disastrous long term implications on the nation’s health.

“These facts have implications for the policies to be adopted in the coming autumn, particularly given the peculiar ethical issues associated with lockdown,” he said. “For example, plausible estimates of the life loss burden from an unmitigated Covid-19 epidemic in the UK are about two weeks per person.

“A plausible lower bound on the UK life loss from the 2008 financial crisis and its aftermath is seven weeks per person. The economic shock from lockdown is substantially larger than 2008.”

Commenting on the research, Professor Carl Heneghan, director of the Centre for Evidence-Based Medicine at Oxford University, said data from the Royal College of GPs (RCGP) showed a similar fall in respiratory infections in the week beginning March 15.

Figures show new infections fell off a cliff even though lockdown would not be in place for a further nine days, leading to the conclusion that social distancing was already working and having a major impact on disease transmission within the community.

“The effect is in line with the RCGP surveillance data which shows the drop in consultations of acute respiratory infections for the week of the 15th  March,” Prof Henegan said.

He also found that calls to NHS 111 peaked on the day lockdown was implemented, even though reported infections should have kept rising for several days afterwards because many people would have been incubating the virus and would not develop symptoms for around five days. 

The figures suggest infections had actually peaked five days earlier. 

Professor Sir David Spiegelhalter, Winton Professor of Public Understanding of Risk in the Statistical Laboratory at the University of Cambridge, added: “I would not be surprised at this – peak deaths were on April 8, only 16 days after lockdown.”

 

South West doctors speak of fears over ‘second wave’

Doctors in the South West have warned against complacency as lockdown is eased, expressing fears about a second peak of the coronavirus.

Martin Freeman www.devonlive.com 

Dr Lucy-Jane Davis, British Medical Association South West chair, says that the infection rate remains “worryingly high”.

“The risk surrounding this highly infectious illness remains significant and if there is further spread thousands more families could lose loved ones before their time,” she says in an open letter (see page 20).

“In a recent BMA survey, doctors in the South West revealed fears around a second peak of Covid-19 that has the potential to overwhelm the health service.

“Forty-seven percent of doctors in the region expressed that they were not confident in their ability to manage a second influx of Covid-19 cases.

“We understand that the lockdown in itself has had an impact on people’s health and wellbeing, but it remains vital that easing it must be done gradually and sensibly. The Government must take every measure possible to support the public and employers in stopping the spread of the virus, whether that’s in outdoor places, reuniting with friends and loved ones, or returning to work.

“To prevent a second peak and avoid more loss of life in the South West, the BMA is calling on the Government to establish a wide-scale, accurate and systematic approach to test and trace and support the public in adhering to social distancing and infection control measures as restrictions are relaxed,” said Dr Davis.

“Frontline staff have worked tirelessly during this pandemic to care for patients and save as many people as possible, often putting this before their own safety, wellbeing and health.

“To risk a second pandemic as a result of complacency could serve to undermine the incredible efforts they have already gone to throughout this pandemic.”

Dr Davis’ letter comes after a new BMA surveyed showed that 53% of doctors in the South West fear the backlog of non-covid patients is becoming uncontrollable.

The survey also found that over 63% of doctors in the region say demand has increased significantly in the past week, with 16% saying it had already exceeded pre-March levels.

Twenty-one percent of doctors in the region said there had been no engagement with them over how to manage the increase in demand in their place of work or local area.

Dr Chaand Nagpaul, BMA council chairman, said: “Doctors are rightly worried.

“The care they are able to offer non-covid patients has worsened because of prioritising those with the virus, and they have little confidence that they can manage the surge in demand to come.”

At the height of the pandemic non-emergency surgery was halted. Public Health England has said that cancer referrals from GPs have fallen by as much as 80%.

A Department of Health and Social Care spokesperson said: “Thanks to the hard work and dedication of NHS staff, hospitals were not overwhelmed during the peak of the coronavirus outbreak and our intensive care capacity met the needs of patients.

“We continue to work closely with the NHS and partners and guidance has already been issued to the NHS on the process of starting to restore urgent non-covid services in a safe way.

“We are committed to ensuring the NHS has the funding and support it needs to respond to the crisis.”

NHS test-and-trace system ‘not fully operational until September’

“A leaked email from the chief executive of Serco – one of the main companies contracted to deliver the service – revealed how he doubted the scheme would evolve smoothly but said he wanted it to “cement the position of the private sector” in the NHS supply chain. ”

The NHS coronavirus test-and-trace system designed to prevent a second deadly wave is not expected to work at full speed until September or October, the Guardian has learned.

Tony Prestedge, the chief operating officer of the NHS scheme, admitted in a webinar to staff that the programme would be “imperfect” at launch, adding that he hoped it would be operational at a world-class level within three to four months.

It comes as a leaked email from the chief executive of Serco – one of the main companies contracted to deliver the service – revealed how he doubted the scheme would evolve smoothly but said he wanted it to “cement the position of the private sector” in the NHS supply chain. 

The disclosures come as scientists said lockdown measures should not be eased until the test-and-trace service is well established. The system, which tracks those who have contracted coronavirus and anyone they have been in contact with, before asking them to self-isolate, was rolled out across England last week with the help of 25,000 contact tracers.

Justin Madders, a shadow health ministers, said the idea that the system may be months away from being fully operational was “deeply concerning”. 

In a webinar for staff, Prestedge, a senior banker drafted in to help run the programme to trace infected people, said: “I am sure when Dido [Harding, chief executive of scheme] announces this service later she will make clear that it is an imperfect service at launch that we will improve over time and make it world-class by the time that we are moving towards the September or October time.”

Prestedge, who is due to take up the post of deputy chief executive of the bank Santander UK, said: “We know it will be imperfect, we know it will be clunky but we ask you to help us improve the service.”

The video was recorded on 27 May, just before the government announced the scheme would launch. In following days, the health secretary, Matt Hancock, laughed off claims in an interview with Sky News that he had rushed to introduce the system amid the political row over the alleged breach of lockdown rules by Boris Johnson’s chief adviser, Dominic Cummings.

Initially an app was supposed to be part of a national rollout of the test-and-trace programme, but this element has been beset by problems and instead the tracing system started without it.

Prestedge said he expected test and trace to be running for 24 months and that initially test results would take two to three days to arrive, with the hope this would improve over time.

A leaked message from Rupert Soames, Serco’s chief executive, also revealed his own concerns about the initial months of the programme. Serco is among a number of companies that are recruiting, coaching and managing contact tracers who do not have clinical training.

They have taken the bulk of the work, recruiting 10,000 of the new 25,000 contact tracers after being awarded an initial fee of £45.8m, which could rise to £90m.

In an email forwarded to staff, which was then immediately recalled, a message from Soames said: “There are a few, a noisy few, who would like to see us fail because we are private companies delivering a public service. I very much doubt that this is going to evolve smoothly, so they will have plenty of opportunity to say I told you so.”

It continued: “If it succeeds … it will go a long way in cementing the position of the private sector companies in the public sector supply chain. Some of the naysayers recognise this, which is why they will take every opportunity to undermine us.”

Soames also asked managers to make sure employees behave in a way to survive the “Daily Mail test”, explaining that this meant “that you would not mind their behaviour being described on the front of a national newspaper”.

“It is inevitable that someone somewhere is going to behave badly,” he said, adding that he wanted to know immediately to resolve the issue.

He continued: “At Serco we have a fair amount of experience managing difficult issues and one of the hard lessons we have learned is that the truth we can manage, it’s the evasion or cover up that destroys you.” 

Serco said the message from Soames was not recalled but may have been forwarded to a wider group of employees in an email that was recalled.

Madders said: “The government’s own scientific advisers have said that an effective track, trace and isolate system must be fully operational before the lockdown is relaxed further so any suggestion that we may be months away from that is deeply concerning.  

“We need assurances from ministers that they urgently ensure an effective system is in place and working effectively. To move ahead with further easing of the lockdown without this vital system working fully would be a huge gamble that no responsible government should take.”

Those working for test and trace have raised concerns about a slow start. The Guardian was shown an email dated 2 June from one provider to their team that said: “We did experience some teething issues yesterday particularly with CTAS [the contact tracing and advice service software] and this feedback has been shared with the clients.”

It told those working for the service that the data volumes were still very low and there would be times when no records were available. Staff were told to do e-learning at this time. 

On 1 June, an email told staff ttheir hours would be reduced owing to a lack of cases coming through. Another email said: “With the operations in its early stages, the data volume at the moment is not at full capacity, and as such you may experience prolonged periods of waiting for a case.”

One anonymous worker said: “The communication and training have been terrible from the start and I’m yet to know anybody who has made a call to a member of the public.

“We have been paid to do nought and been dossing all day every day on government money. I have personally been sat in my garden sunbathing, drinking and chilling with my pals for two and a half weeks now, occasionally coming inside to stop my computer going to sleep and check my emails. Normally I would be happy about this but when the countries public health is at risk. It is a tragedy.”

A Department of Health and Social Care spokesperson said: “The new NHS test and trace service is up and running and is helping save lives. Anyone in this country can now book a test and the majority who book a test get the results back within a day. We have over 25,000 contact tracers in place, who have all been trained and are fully supported in their work by public health experts.”

One in seven Help to Buy homes lose value – Which? News

Data exclusively obtained by Which? has revealed that more than 5,000 Help to Buy homeowners made a loss on their properties in the scheme’s first six years, despite house prices in their local areas rising significantly.

A long read but very interesting – Owl

By Stephen Maunder www.which.co.uk 

The Help to Buy scheme usually allows buyers to borrow up to 20% of a new-build property’s value from the government, put in a 5% deposit and take out a mortgage on the rest. The government loan is repaid as a percentage of the property’s value, rather than a set cash sum.

Out of around 35,000 people who had repaid their Help to Buy equity loans in England by the end of June last year, one in seven (14%) paid back less than they’d borrowed in the first place.

But despite how it might sound, repaying less isn’t a good thing. The idea of Help to Buy is that homeowners build equity through paying down the mortgage and the property value rising, enabling them to pay back the loan within the first five years (after which interest kicks in) and refinance or move to their next home using just their equity and a mortgage.

If the home loses value, the owner will pay back less to the government but also hold less equity themselves, while still owing the same amount on the mortgage. In an area where the surrounding house prices have risen – which is the case in every area where Help to Buy homes have fallen in value – this makes it extremely difficult to afford a new home.

There have long been suspicions of a ‘Help to Buy premium’ charged by developers to unwitting buyers. Here, Which? uses never-seen-before Help to Buy loan redemption data to explore whether there’s any truth to the rumours.

Help to Buy equity loan repayment figures kept under wraps – until now

Help to Buy homeowners usually settle their loans when the property is resold, but they can also do so when remortgaging by using equity they’ve built up in the home or borrowing more from the mortgage lender.

We now know that over 35,000 people have repaid their loans since Help to Buy launched in 2013. But when Which? started investigating this, it proved almost impossible to get hold of any data on how many loans had been redeemed, let alone whether they’d been repaid at a profit or loss.

In June 2019, we made a Freedom of Information request to Homes England. This and our subsequent appeal were both rejected. It was only after making a complaint to the Information Commissioner, which was upheld, that Homes England finally provided us with the data we’d asked for in April 2020.

The figures show that, up to June 2019, the government made an overall profit of 11.4% on repaid equity loans, but that 5,002 of the 34,747 loans were repaid at a loss.*

Given that public money is used to fund the scheme, and loan redemptions are a key indicator of its success, we were surprised that it was so challenging to get hold of this information.

*We have removed the top and bottom 0.5% of redemptions to exclude anomalies.

‘Our Help to Buy home lost £12,000 in value’

Rebecca Tromans and her husband bought their first home at Crest Nicholson’s Bolnore Village development in Haywards Heath in January 2016. The new-build property cost £299,950, and they took out a 20% equity loan of £59,950.

Rebecca told Which?: ‘We were paying a lot in rent and really wanted to get on the housing ladder, but my husband was self-employed so mortgage lenders wouldn’t take his income into account.

‘We’d never really considered new-build homes as we knew they could be overpriced, but Help to Buy allowed us to get a mortgage using only my income.’

The couple could have only afforded a small home on the open market, but Help to Buy allowed them to buy a bigger property. Their plan was to live in the home for a couple of years and then sell up long before interest kicked in on the equity loan.

By 2018, Rebecca’s husband was in full-time employment, meaning the amount they could borrow on a mortgage had increased significantly.

‘We decided to sell in mid-2018, but it took us until early 2019 to find a buyer as the first sale fell through and then the market slowed down. We ended up selling the home for £287,500 – a loss of £12,450’, she says.

Rebecca feels that despite the loss, Help to Buy was a good short-term option given her circumstances. However, she believes buyers should think carefully about their long-term plans before using the scheme.

She says: ‘We did a lot of research at the start and planned how we could get out of Help to Buy and buy a home on the normal market, as we didn’t want the equity loan and interest payments hanging over our heads in the future.’

Revealed: the biggest Help to Buy losses

We looked at all 324 local authorities in England where loans have been repaid, and discovered that while most turned profits, 26 recorded losses.

Worryingly, Land Registry data shows that average house prices increased in every single one of these areas during the same period – and in 21 of the 26, they rose by more than 10%.

This begs the question of why Help to Buy properties fell in value in these areas, and implies that there may be some truth in critics’ suspicions that some developers have applied premiums to homes bought via the scheme.

House hunters using Help to Buy don’t have a great deal of negotiating power as loans are only available on selected properties, demand often outstrips supply, and it can be hard for buyers to know whether the asking price is fair or not – particularly on new developments where comparable properties’ sold prices are hard to come by.

Where have Help to Buy loans been repaid at a loss?

What’s happened in my town?

Hover over or click on an area to see the profit or loss made on Help to Buy loans, plus how many have been repaid.

How much profit has been made on loans?

Profit matters when reselling a Help to Buy property, as you’ll only have 80% of the proceeds remaining after you’ve paid off your equity loan.

This means that any house price stagnation or fall in value could leave you unable to progress up the ladder.

Percentage of Help to Buy properties making profits and losses

The chart above shows that most people who’ve repaid Help to Buy loans have made a profit on their homes.

However, the amount of profit made has fallen over the years.

By April 2019, more than half of equity loans taken out in the scheme’s first year (2013-14) had been repaid, with an average profit of 17%. By way of comparison, average house prices in England increased by 35% in the same period.

Fast forward two years to homes bought in 2015-16 and 19% of loans have been repaid. The average profit on repaid loans was 9%, compared with an 18% increase in overall house prices.

Average profit by year of property purchase

It stands to reason that homes bought earlier would turn the greatest profits because they’ve had longer to increase in price.

When we look a little deeper, however, it becomes clear that Help to Buy prices began to soar a couple of years after the scheme’s launch.

First-time buyers and the Help to Buy premium

Help to Buy was launched to boost housebuilding and ‘support a new generation in realising the dream of home ownership’. While it’s technically not limited to first-time buyers, more than 80% of properties sold under the scheme have been first homes.

In its first full calendar year (2014), 22,621 first-time buyers bought a home using Help to Buy. By 2019 that figure had nearly doubled to 42,960.

And as the scheme’s popularity has increased, so too have its price tag.

Between April 2013 and the end of 2019, the average price paid by first-time buyers in England for any type of home increased by 39%. The average amount paid by all buyers of new-build properties also increased by 39%.

But the amount paid by first-time buyers using Help to Buy jumped by a much heftier 51%.

Year-on-year price increases for all first-time buyers vs those using Help to Buy

It’s widely accepted that new-build homes cost more than existing properties. After all, they’re brand new, have warranties, and offer the novelty of no one else having lived there.

But even taking this into account, the double-digit price increases seen on Help to Buy homes sold in 2016 and 2017 seems excessive when compared with the overall market.

Problems reselling homes on Help to Buy developments

The minute you drive a brand-new car off the forecourt it depreciates in value, and the same is true of new-build properties. Unlike with cars, though, the hit taken on a new-build home should lessen over time, as property values across the entire market grow. Most new-build buyers will still ultimately sell at a profit.

But as we’ve shown, this isn’t always the case – particularly with Help to Buy, where buyers sometimes appear to pay above and beyond the usual new-build premium.

It’s hard to find resale data for Help to Buy properties, as the Land Registry doesn’t list whether a home was originally bought using the scheme. So we looked at developments that heavily promoted Help to Buy (but sold properties in the normal way too) to give an indication of what could have happened to Help to Buy homeowners who’ve tried to sell.

As the charts above show, many Help to Buy properties have made decent profits – particularly those from the earliest days of the scheme. But we’ve found multiple examples of developments where homeowners have struggled to sell, or been forced to lower their asking prices in order to attract a buyer.

Bridle Wood, Telford

The Bridle Wood development in Telford and Wrekin was launched in 2016, with just over half of its 79 properties bought using Help to Buy equity loans.

In its promotional material, developer Keepmoat Homes wrote that ‘with offers like Help to Buy, moving into a great new home could be more affordable than you think’.

Two homeowners at Bridle Wood have since sold their properties, turning losses of 14% and 1%. A third property sat on the market unsold for eight months.

Yet average house prices in the local area increased by 20% between January 2016 and March 2020.

Viridium, Camberley

In 2016, Hodson Developments held a dedicated Help to Buy event at its Viridium development in Camberley, Surrey, to showcase its new phase of homes.

Its ‘Belgravia Collection’ of properties was sold on the same development the previous summer.

Since then, four flats in the Belgravia Collection have been resold. Three suffered losses of more than £20,000, or 8% of the original purchase price, while one turned a small profit of 1.6%.

A fourth flat was listed in August last year for £9,000 less than the owner had paid for it, before being reduced by a further £10,000 in September, as shown on Zoopla:

It’s now sold, although we don’t yet know how much for. Even if the seller had achieved their final asking price of £265,000, though, that would have meant a loss of 6%.

Another four flats are currently for sale, all at the same price their owners originally paid. Three of them were originally on for more, but have since been reduced.

Meanwhile, average property prices in the local authority increased by 8% between August 2015 and March 2020.

The London conundrum

If your Help to Buy property has fallen in value and you’re worried about losing money when you sell, you could simply stay put.

But this can be expensive too, as interest payments kick in on Help to Buy equity loans after five years. Rates start at 1.75%, and rise by the level of the Retail Prices Index (RPI) plus 1% each year after that.

It might not sound too bad, but consider Help to Buy homeowners in London, where instead of the standard 20% you can borrow up to 40% of the property value from the government. Three quarters (77%) have opted to do this.

In a slow property market with little if any growth in house prices, homeowners face significant struggles to pay back these loans before interest kicks in.

Our calculations show that in year six, buyers who’ve taken out the maximum loan of £240,000 face paying £4,200 in interest on top of their mortgage and, if they’re in a flat, service charges and ground rent.

Help for house builders

Help to Buy has long faced allegations of lining the pockets of builders at the expense of buyers.

In September, Oliver Shah of The Times wrote that ‘rarely has an industry grown more addicted to the heroin of public cash than builders with Help to Buy’.

The National Audit Office says the total combined housing sales of five of the six largest developers in England – Barratt, Bellway, Persimmon, Redrow and Taylor Wimpey – have increased by more than half since Help to Buy was launched.

Overall, between 36% and 48% of these developers’ new homes were sold via Help to Buy in 2018.

Their share price increases have significantly outstripped those of the FTSE 250 since the scheme’s launch.

The future of Help to Buy

Criticisms of Help to Buy haven’t fallen on deaf ears. From next April (though possibly later due to coronavirus) the scheme will only be available to first-time buyers, and regional price caps will be brought in.

These caps were set at 1.5 times the average first-time buyer price per region in Autumn 2018.

Critics have pointed out that these prices will be at least two-and-a-half years out of date by then. With average values having risen in the meantime, developers may be put off building Help to Buy properties as it simply won’t be worth their while.

And therein lies the problem: as Help to Buy is limited to new-build properties, it needs developers’ buy-in to work.

Major house builders will only be interested if they can make a decent profit, but this comes at the expense of the buyers the scheme is intended to help, and the government itself.

Has Help to Buy been a success?

By the end of 2019, 214,000 first-time buyers had bought a home in England using Help to Buy. On that basis, the scheme has undoubtedly achieved its aims of boosting house-building and homeownership.

It has helped thousands of people who would otherwise have struggled to get a mortgage to buy their own home, and can often be a great option – provided that buyers have a plan for paying back the loan and that properties are priced right in the first place.

However, the extra borrowing power granted by Help to Buy equity loans has enabled ever-increasing price points rather than forcing developers to build homes that are affordable in the first place.

Couple this with the Public Accounts Committee’s finding that the government (and taxpayer) may make a small loss on repaid loans once inflation has been factored in, and it is reasonable to argue that house builders have benefited the most.

By the time the Help to Buy equity loans scheme is closed in 2023, the government forecasts it’ll have loaned £29bn to fund 462,000 purchases.

Many buyers will have reaped the rewards. But others may find that while the scheme helped them onto the property ladder, it left them stuck on the bottom rung.

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