In a property-owning democracy –towhich, despite the ups and downs of the past few decades, most people in the UK still aspire – anything which allows young peopletoachieve the dream of their own space hastobe unreservedly welcomed.
Eric Curran is managing partner of DM Hall, a firm of independent chartered surveyors in Scotland
Another two years - good news for new-buildHelptoBuy, but what about the much larger second-hand market?
In a property-owning democracy –towhich, despite the ups and downs of the past few decades, most people in the UK still aspire – anything which allows young peopletoachieve the dream of their own space hastobe unreservedly welcomed.
So the news that the Scottish government is extending its ambitiousHelptoBuyscheme for another two years will bring a measure of good cheer this Springtothousands of hopefulbuyers for whom the prospect of a home of their own has inched slightly closertoreality.
First-timebuyers – and, it hastobe said, existing home owners – will be abletosupport their purchase with thehelpof a 5% deposit and a 15% interest free government equity loan.
The scheme, which concentrates on properties valued at upto£200,000 – ie, affordable homes intoday’s increasingly competitive market – will come at a cost of a further £100 million over a two-year period starting in April next year.
This is ontop of a massive ongoing investment which, since 2013, hashelped more than 12,000 householdstorealise their property ambitions. The extension period should benefit another 4000 households.
This is all very laudable. But it is also quite reasonabletoask a few pertinent questions based on the old legal dictum ofcui bono, or who benefits?
Clearly, the luckybuyers in the schemes are primary beneficiaries, as are the wider public who should gain from speculative development, construction employment and knock-on gains down the supply chain.
Builders,too have been incentivised by the schemes and are more abletomake their properties achievable without a purchaser havingtoraise a deposit of upto20%, an insurmountable obstacle for many people.
But the obverse side of the “who gains” coin is who loses? And it could well be argued that the people most disadvantaged arebuyers and sellers in the much larger second-hand housing market in Scotland.
There are countless prospective first-timebuyers in tryingtogain a foothold on the ladder through the traditional route ofbuying a home previously owned by someone else. Why should government assistance be withheld from this sector?
Sales of second-hand homes vastly outnumber new build sales in Scotland and they contribute quite as muchtothe economy through subcontractors and trades people carrying out home improvements, extensions and alterations.
Far from being given any assistancetoget their hands on a title, second-handbuyers face an obstacle course set up by risk averse lenders who are themselves shackledby regulator-imposed capital reserve rules.
Some observers have concerns that an unintended consequence of the schemes could be price inflation, with builders abletouse the incentivestogenerate premium prices, as well as the upsizing effect for existing home owners.
We need new homes. There is no question of that. But is it really in the wider market’s interests if the new build sector is encouragedtogorge on a diet of government incentives which it receivestothe exclusion of all other property types?
It is legitimatetoask ifHelptoBuyschemes simply push up prices across the board while funnelling funds into one, effectively subsidised, sector. If the aim istohelpfirst timebuyers, why is thathelpconfinedto5%to10% of the market?
Scottish Housing Minister Kevin Stewart has said in relationtothe extension of the schemes that “housing is about more than bricks and mortar”. He is absolutely right. As well as new developments, it is also about the huge previously-owned market, and concerns about that should perhaps also be given some Ministerial attention.
