Originally posted on June 13 on my blog for Inside Housing.
Whatever you love it or hate it, Thursday’s report from the National Audit Office (NAO) will probably not do much to change your mind about Help to Buy.
If you think that the equity loan scheme first launched in 2013 has boosted housebuilding and helped more people to buy their first home, you will find evidence to support that view: new-build property sales increased from 61,000 a year in 2012/13 to 104,000 in 2017/18; and around 81% of people using the scheme have been first-time buyers.
If you think the scheme has mainly benefited housebuilders and the benefits for buyers have been more limited, you’ll find backing for that too: 63% of borrowers could have afforded to buy anyway; many of them have used the scheme to buy a bigger house than they could previously have afforded; and 10% of buyers had incomes higher than the £80,000 (£90,000 in London) limit for eligibility for shared ownership.
The report does reject one common allegation made against Help to Buy by estimating that homes sold under the scheme have cost just 1% more than similar new-build homes. Previous estimates ranging from 5% to 20% have not compared similar properties, says the NAO.
However, that is just part of a much bigger new-build premium (the difference between prices of new and second-hand homes) and the NAO seems to accept the high figure of a premium of 15-20% as a given rather than the product of market conditions that Help to Buy helped to create.
Originally posted on September 24 on Inside Edge 2, my blog for Inside Housing
The disposal of public land for new homes looks destined to go down as one of the great housing fiascos of this decade.
An extraordinary report published on Thursday by the Public Accounts Committee (PAC) reveals complacency on an epic scale within the Department for Communities and Local Government (DCLG).
The report is a follow-up to an investigation by the National Audit Office into a programme announced n 2011 by a certain former housing minister (no prizes for guessing which one) to ‘release enough public land to build as many as 100,000 new, much-needed, homes and support as many as 25,000 jobs by 2015’. In March this year the DCLG proclaimed mission accomplished: land with capacity for 109,950 homes across 942 sites had been sold.
However, in a report published in June, the NAO found that ‘the target measured a notional number of expected homes, not actual homes built’. On top of that, a quarter of the 100,000 ‘homes’ were on land that had been sold before Grant Shapps set the target or on land that was categorised as ‘sold’ when its owner simply moved outside the public sector (Royal Mail was privatised and British Waterways moved to a charitable trust).
Guess what the total value of government financial instruments to support new homes will be by 2021.
The answer that leapt off the page at me in a report on the department’s performance published by the National Audit Office (NAO) last week is a cool £24 billion. And that is just the direct support that comes under the DCLG and its agencies.
Perhaps the figure should not come as a surprise. After all, ever since the financial crisis we’ve grown used to the government adopting new ways of financing things that do not rely on conventional spending or borrowing.
The three programmes that make up the £24 billion are £10 billion for financial guarantees to housing associations and the private rented sector to help build new homes, £9.7 billion for the Help to Buy equity loan scheme (HTB1) and £4.2 billion for other loans and investments such as Build to Rent and the large sites scheme.
In the furore over the Help to Buy mortgage guarantee scheme, its equity loan counterpart has escaped much scrutiny. A report out today changes that.
Help to Buy 1 started in April last year. Equity loans worth more than £500 million households were made in the first nine months of the scheme to almost 13,000 households. Another 9,600 loans were in the pipeline. If everything goes to plan over the next two years, 74,000 households will eventually benefit from equity loans worth £3.7 billion.
Today’s report from the National Audit Office (NAO) makes you remember that although it is small by comparison with the £12 billion of mortgage guarantees offered by its more controversial sibling, Help to Buy 1 is significantly bigger than the FirstBuy scheme that it replaced.