May promises £10bn funding for Help to Buy - property reacts

Prime minister Theresa May has announced a fresh £10bn funding pot for the Help to Buy scheme, ending speculation that the scheme was to be halted.

Speaking ahead of the Conservative Party Conference this week, May said the funding would allow a further 135,000 people to buy a home under Help to Buy.

May did not reveal where the funding would come from but further details are expected to be announced in the Budget on 22 November.

“And, to help younger people buy a home, we will expand Help to Buy with a further £10bn”. 3/3

— Theresa May (@theresa_may) October 1, 2017

Property reacts

Barratt Developments briefly topped the risers in the FTSE 100 on Monday morning after the announcement. Shares in Barratt were up 3.6 per cent in late morning trading, with Persimmon the third-biggest riser in the FTSE 100 up 3.4 per cent and Taylor Wimpey up 2 per cent.

Help2buy increases demand while supply is static. Prices rise and developers gain. If true this is a monumental mistake. Help2buy shld go. https://t.co/ldG4kRBQKE

— Steve Norris (@StevenJNorris) September 29, 2017

Jean-Marc Vandevivere, chief executive of PLATFORM_, said: “Help to Buy is one of the tools available to help solve the housing crisis in the UK, by focusing on homeownership. We need to make sure that the government continues to support a larger range of tools, not only owner-occupation, but also the build to rent burgeoning sector, in order to meet the aspirations of Britain’s growing renters by providing high quality, secure and flexible accommodation. If the last 20 years have proven anything, it’s that traditional house builders alone won’t deliver the volume of housing the country needs - we should be looking to tap into other sources of supply as well.”

Stewart Baseley, executive chairman of the Home Builders Federation, said: “The Help to Buy scheme hasn’t just helped 200,000 people buy a home; it has helped them to buy a new build home which is, in turn, boosting supply and generating huge benefits for communities, councils and the Exchequer. Ultimately If people can buy, builders can build and confidence in demand is crucial to future build rates. The [latest] figures show that if demand for new homes remains strong and the planning system processes applications efficiently, further increases in build rates can be delivered in the coming years.”

Craig Hall, new build manager, Legal & General Mortgage Club said: “Following last week’s Help to Buy figures being released, this is recognition of the fundamental role the scheme has played, particularly in helping first-time buyers onto the housing ladder, with an estimated 228,000 people using the scheme and a 52% increase in net supply. It is interesting to note that the government has specified this funding is largely aimed at first-time buyers, this could be an early sign of intent for potential changes to the scheme. Although this funding will be reassuring for developers and lenders, we are still to receive the full detail on the funding and eligibility which is crucial for long-term planning.”

Polly Neate, chief executive of Shelter, said: “Extending Help to Buy is the wrong priority at a time when over a million renters are struggling with crippling housing costs. Help to Buy has barely helped the first-time buyers it is targeted at and has done nothing to help those worst affected by our broken housing market and those at risk of homelessness. Moreover it has increased house prices and propped up a speculative development model in need of reform.”

Andy Sommerville, director at Search Acumen, said: “The good news in the most recent Help-to-Buy loan scheme figures is just papering over the cracks in our housing market. A record number of borrowers in Q2 2017 took advantage of the programme and that’s an admirable thing. But, borrowers had to take on more debt than ever to make their homeownership dreams a reality. In London in particular, many first-time buyers are resorting to taking on equity loans of up to 40%.”

Colin Lewis, chief executive of Avant Homes, said: “While improving transport links and extending Help to Buy funding by £10bn are good news for buyers, unfortunately these policies have very little impact on the supply side. To boost this, we really need to see the government promoting a far more supportive local approach to planning permissions for housing in the region, otherwise I fear the North will struggle to provide enough quality, attainable homes to match the demand of this expected future workforce.”

 

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