Misguided help

8 Oct

The Help to Buy scheme is being launched today by the government. The idea behind the scheme is to help first time buyers to get a mortgage. They will be able to borrow up to 95% of the value of the property but have to borrow from state-backed financial institutions to qualify.

Call me a cynic if you like, but I can guess exactly what is going to happen. In areas where there is pressure on housing and house prices are rising, the prices will go through the metaphorical roof, seriously raising the possibility of yet another property bubble. In areas where house prices are flat there will be complete apathy because there are few jobs and no possibility for the buyers to pay the mortgages.

What was needed was help for builders to create new houses where they are required. This would help to keep house prices under control and prevent a property bubble. The scheme currently favours the sellers and not the builders. House building would also give employment and inject more money into the economy. This is one more example of a policy helping the haves and being irrelevant to have nots.

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