“The housing crisis has become a central issue in British politics, with a shortage of social housing forcing millions into expensive, shabby private rentals; locking a generation out of home ownership; and causing a massive increase in street homelessness.
Help to Buy, a government-backed loan to supplement mortgages for first-time buyers, remains the Conservatives’ biggest housing intervention. But it sucks.
Even the Tory press thinks it’s rubbish. Last month, the Daily Mail’s Money Editor wrote that Help to Buy was a “flawed plan” that “would bump up house prices, boost builders’ profits and increase debt”. In the same month, the normally Tory-supporting Times analysed the Help to Buy figures and argued that “while it has boosted profits for house builders, it has failed to provide the greater supply of new homes that is needed”. The Times worried that even those lucky enough to get a Help to Buy house might now be stuck in “negative equity”, with “young people … being left in overpriced homes that they will struggle to sell”.
For its part, the solidly Tory Sun also worries that sticking with Help to Buy and failing to offer something to increasingly angry private renters could cost the Tories the next election.
So why is the government so keen on the scheme? The answer could literally be around the necks of delegates at this year’s Tory conference. The Conservative party sells advertising space, charging corporations to brand the lanyards that house the security passes conference attendees must wear at all times inside the Conference “secure zone”. Lanyards for this year’s Conservative Conference in Birmingham bear the name “Thakeham Homes”, a property developer making profits with help from Help to Buy.
Thakeham Homes is a Sussex-based residential property developer with an extensive “landbank” throughout the Home Counties. According to its latest accounts, Thakeham believes it is doing well because of “low interest rates and increased demand from first time buyers, supported by Help to Buy”.
In 2018, Thakeham’s turnover jumped 64 percent, to around £30 million. The company’s profits jumped from £100,000 to £4 million. The firm says that Help to Buy helped it boost its business; according to the accounts, “the adaptation of our planning strategy to increase the percentage of Help to Buy eligible properties within our schemes has yielded an increased sales rate and has enabled our resilience in light of the effects of Brexit on the wider market”.
Thakeham says it is “encouraged by continued political support” for Help to Buy, and seems to be encouraging that “continued political support” by giving the governing party cash. According to Conservative Party sales brochures, Lanyard Sponsorship costs around £16,500 (2016 brochure).
Thakeham’s sponsorship extends beyond lanyards. Thakeham Homes began donating to the Tories in 2017 and have now given £107,00 in total.
I asked Thakeham if its Conservative donations were a way of encouraging continued government support for Help to Buy. Their spokesperson: “Yes, we do donate to the Conservative Party and we think it is important as over 50 percent of our construction is for public sector partners. Thakeham contract builds for housing associations and local councils; placemaking and seeking to enhance and create new communities.”
He added: “The amount of product we sell via Help to Buy is small in proportion when compared to our contract build for housing associations and local councils for whom we deliver affordable homes.”
Help to Buy was introduced by Chancellor George Osborne in 2013. It offers a zero-interest loan to buyers of new-build houses costing up to £600,000. Loans are worth up to 20 percent of the cost. The Treasury has loaned a whopping £7 billion on the scheme – that’s a massive and much-criticised intervention in the market.
The criticisms will continue to be made – even from those sympathetic to the Tories. But money also talks. Thakeham is not the only firm benefitting from the multi-billion scheme who in turn give the Conservative Party cash.
In 2015, companies owned by businessman John Bloor started donating to the Tories. Bloor’s firms have since donated £1 million, and Bloor has attended Tory dinners with Theresa May, Philip Hammond and other ministers. Most of Bloor’s money comes from his housebuilding firm, Bloor Homes. According to its latest company accounts, Bloor Homes’ turnover is up 27 percent to £917 million. Profits have leapt by 58 percent, to £152 million. The average price of each Bloor home sold has increased from £275,000 to £300,000 in a year.
The accounts explain this performance by saying “the housing market has been strong” thanks to “the government backed Help to Buy scheme”.
I asked John Bloor Homes if the Bloor donations were a way of encouraging continuation of the Help to Buy scheme. A spokesperson said: “Bloor Homes continues to provide, via various tenure and financial structures, much needed housing from social rent all the way through to private ownership, driven by clear demographic and affordability demands.”
There are also jobs for Tories in Help to Buy firms. Since 2016, Angela Knight has been a director of housing firm Taylor Wimpey. She is paid £60,000 a year for this part-time “Non-Executive” job on the board. Knight was a former Conservative minister who is still “in” with top Tories. In fact, George Osborne – who launched Help to Buy – also gave Knight a job at the Treasury, which runs the scheme. Knight is currently the Treasury’s “Chair of the Office for Tax Simplification”. According to Taylor Wimpey’s accounts, the firm made £589 million in profit this year, with around 39 percent of sales relying on Help to Buy.
If the Sun is right, backing Help to Buy instead of investing in more social homes and regulating rents could sink the Tories, as voters hurt by the housing crisis desert the party. But the donations from Help to Buy-backed companies – not to mention the post-ministerial jobs they offer – might encourage them to stick with the scheme.