Press Comment: Despite Help to Buy's positive statistics
it has some serious flaws
26 February 2019
If you are covering the Help to Buy statistics released today, please see the following comment from Gemma Harle, managing director of the Intrinsic mortgage network, part of Quilter:
"In the wake of Persimmon’s bumper results announced this morning, today’s statistics surrounding the success of the Help to Buy ISA scheme are somewhat bittersweet.
"The natural reaction to Help to Buy without understanding the wider ramifications of the scheme is that it simply better enables a generation suffering with the very real prospect of never owning a home to get their first foot on the ladder. Looking at some of the results, this viewpoint would seem to ring true; those who use the scheme have an average age of 28 compared to the national average of 30 and houses bought through the scheme are on average over £20,000 cheaper than the national average for homes bought by first time buyers.
"However, when you take a deeper dive into Help to Buy, the scheme throws up some serious faults, one of which being that some housebuilders are enjoying tremendous results off the back off a tax-payer funded programme and subsequently paying their executive’s outrageous sums of money. Just look to Jeff Fairburn’s on-camera debacle last year for proof.
"Another problem in regards to the Help to Buy equity loan scheme in particular, is that some first time buyers are being left as mortgage prisoners. Those who first took out five-year fixed rate mortgages back when the scheme started are now having to both repay the equity loan and needing to remortgage in a higher interest rate environment. Added to this, there is distinct lack of remortgaging options from lenders in the market involved in the scheme leaving people trapped paying an expensive variable rate mortgage.
"Similarly, the scheme pushes too many people into buying new build houses. This disrupts the chances of people further up the chain moving which could lead to a stagnant market. While getting people to own their own home should be a priority it should not mean that those further up the chain pay the price for this.
"Clearly the Government needs to incentivise companies to build more housing stock, however the Help to Buy scheme might not be quite the finished article and any other scheme put in its place when it comes to an end in 20203 needs to be able to cope with a very finely balanced market place, where simple schemes which on the face of it help some can have disastrous consequences for others."