so th ill-conceived help to buy scheme will now start this week.

(73 Posts)
kissmyheathenass Sun 29-Sep-13 09:50:32

How come they found money for that then? Surely it's going to cost more than the bedroom tax saves?

kissmyheathenass Sun 29-Sep-13 10:02:57

Does no one else think it's going to end in disaster? Boom and bust. Banks richer, land owners richer. House proved further out of reach. More homes repossessed. Ffs.

CogitoErgoSometimes Sun 29-Sep-13 10:03:51

The scheme is the government lending the money that other financial institutions won't cover. It's repayable with interest so, even factoring in defaults, I'd be surprised if it didn't generate money ultimately.

meditrina Sun 29-Sep-13 10:11:09

What is it likely to cost?

It means that buyers of properties (max £600k) only have to pay an upfront deposit of 5% and any further deposit required by mortgage lender will be covered by a Government loan.

So it'll need up front money, but should be cost neutral in the longer term.

Perhaps it's a govt version of the Bank of Mum and Dad for those who don't have families who can help them amass a deposit? Or perhaps the scheme should be called a Mandelson as it's an official, upfront version of what he did on the sly?

kissmyheathenass Sun 29-Sep-13 10:35:30

But to me it seems just like sub prime lending in US and that didn't end well did it? I think lots of people will lose homes they couldn't afford in the first place. It's rate for me to agree with Vince cable but in this I do.

meditrina Sun 29-Sep-13 10:46:54

It's not like sub-prime, as it doesn't let you mortgage over 100%, and you have to pay at least 5% as an upfront deposit. Someone who has amassed up to £30k wouldn't fit the profile of a sub-prime borrower.

But yes, it's designed to prop up property prices. Very slow, gentle growth is probably the desirable outcome. I'm far from sure that any centralised scheme is likely to help much.

niceguy2 Sun 29-Sep-13 10:47:31

on this one, the cost isn't the issue. They're only guaranteeing the money if the lender defaults.

The question remains if this is a good thing to do. On that one, I'm not sure.

We're going back to the government distorting the market and that never ends well.

CogitoErgoSometimes Sun 29-Sep-13 10:48:09

Sub-prime involved 100%+ LTV loans to people with bad credit, not enough income to pay back, gambling that the property value would increase. Often interest only. In this scheme, the banks are lending 75% of the property value, the government is lending 20% and it has to be a repayment mortgage. Presumably, the tests relating to credit-worthiness, income & affordability are still going to be pretty stiff but, if the mortgagee defaults, the hit would be split between the bank and the exchequer rather than just one or the other. Spreading the risk.

noddyholder Sun 29-Sep-13 11:53:42

It is a disaster waiting to happen. I know lots of developers and agents and they are rubbing their hands.

Viviennemary Sun 29-Sep-13 13:06:47

I think it's a totally mad idea. It will lead to boom and bust again. If people can't save the deposit, how will they pay back the deposit and pay a mortgage. In a few years time we will have people having their homes repossessed because they borrowed more than they can afford to pay back. And on homes up to £600,000. I thought it was supposed to help first time buyers. Insanity!!!!

Svrider Sun 29-Sep-13 14:07:22

Interestingly enough our local bank had a new buyers scheme where they helped with budgeting, finances, moving fees, surveys,estate agents, small loans etc.. And was linked directly to affordable mortgages
Worked really well for almost 150 local people to buy their first home without overextending themselves

It's had to be stopped because it doesn't meet the governments new requirements shock

noddyholder Sun 29-Sep-13 14:22:28

Definitely will lead to boom and bust I renovate houses and people keep saying to me I bet you are going to love this! It is going to make some people a lot of £ but for those who partake of it I think there will be trouble ahead with negative equity and an inability to meet payments once they have to start paying interest on the govt bit Not to mention if rates rise which they will eventually as Carney has this week said no more QE and I think next will be higher rates. In fact I wouldn't be surprised if Cameron didn't foresee IR rises and that is why he has rushed this in

MrJudgeyPants Sun 29-Sep-13 14:46:09

This is madness. As Niceguy says, any attempt by the government to game the market will end in disaster.

I have the deepest sympathy for any of our politicians who try to sort out the mess that is high house prices. Simply put, high house prices hardly benefit anyone. However, so many of us bought vastly overpriced houses that any significant readjustment of prices back to a sensible figure will drive millions of mortgage payers into negative equity and almost certainly throw our economy back into recession.

noddyholder Sun 29-Sep-13 14:50:36

Constant mad cap schemes are just putting off the inevitable Prices will have to fall and repossessions rise at some point. A conventional correction which is normal in the cycle in 2005 was avoided by 'loose' lending and the govts ever since have kept it going. After help to buy runs out of steam then what?

kissmyheathenass Sun 29-Sep-13 14:57:37

noddy, I think so too. IR cant stay so low for ever. However, I suppose we will all feel so much richer as our house prices temporarily rise that we will vote for DC again come 2015 hmm. Meanwhile those the scheme was meant to help will be priced further out of the property ladder.

And when the bubble does burst, the banks wont lose out as the tax-payer will be guaranteeing any losses.

Do people really think this is a scheme to help FTBs? I'd happily wager the only winners will be the banks and the already asset-rich.

Preciousbane Sun 29-Sep-13 15:00:07

All I know is that the puppy of an estate agent I had dealings with last week was rubbing his hands with glee about this.

All I need to see now is Robert Peston's mush on the tv reporting on this. I know its not his fault but I see him as a portent of doom when rolled out by the beeb.

NotYoMomma Sun 29-Sep-13 15:34:29

its so they can temporarily inflate the housing market and it will skew the figures to show Growth in the economy and markets and they can say 'ooooohhh lookie!' before the election.

then the shit will hit the fan

It's a ploy to show growth, when in fact there isn't anyconfused

NadiaWadia Sun 29-Sep-13 16:02:33

It is a bloody stupid, shortsighted idea. It is quite obviously just going to inflate the bubble.

NicholasTeakozy Sun 29-Sep-13 18:15:35

It's absolutely going to cause a bubble, one which will burst as soon as interest rates rise, which they're going to have to due to QE devaluing the £ in the long run. I think the difference between the coming crash and the last one will be that the next one will be worse, rates cannot be kept artificially low for ever.

ttosca Sun 29-Sep-13 18:39:43

It's amazing that in 2013, some people can still talk about the existence of 'free-markets' free from the 'distortion' of government.

La la land.

claig Sun 29-Sep-13 19:17:21

Bad policy which may backfire and not deliver votes.
One Nation Labour are promising to freeze everyone's energy bills and the Tories want to help people buying houses.

They say it is for "hardworking" families, but what will all the "hardworking" families prefer - One Nation Labour's policy or Clueless Cameron's policy.

claig Sun 29-Sep-13 19:28:35

"The scheme is expected to enable banks to release £130 billion of loans for buyers of properties worth up to £600,000 who could not raise a larger mortgage deposit on their own."

www.telegraph.co.uk/news/politics/david-cameron/10342014/David-Cameron-My-mortgage-plan-for-struggling-families.html

So while some hardworking families lose their homes because they can't afford to pay the bedroom tax, the State will offer a "help to buy" scheme for some properties worth up to £600,000.

Great! What spin doctors do they employ? Even McBride wouldn't have come up with a plan like that.

claig Sun 29-Sep-13 19:30:35

"enable banks to release £130 billion of loans"

So banks couldn't even be forced to lend money to small businesses who were crying out for it in order to expand and take on new staff, but they will find such a huge sum for houses.

MrJudgeyPants Sun 29-Sep-13 21:02:05

Ttosca "It's amazing that in 2013, some people can still talk about the existence of 'free-markets' free from the 'distortion' of government."

You are absolutely right. We've had successive governments cynically stoking house price inflation whilst at the same time limiting the supply of new builds through restrictive planning systems. When the wheels came off the wagon, the governments first instinct was to support the very people who'd made the most money from that inflation by bailing out the banks, and even now, we have the government interfering with the system to allow more people to over-extend themselves by guaranteeing their mortgage deposits.

Likewise, elsewhere in the news, the same person who championed the Climate Change Act which artificially raised everyone's energy bills is the same wallah proposing a cap on energy prices...

Under these (and many other) circumstances, surely a free market solution would be far more preferable, and cheaper for us all, than the 'distortion' which the state brings.

Wonderstuff Sun 29-Sep-13 21:13:43

I'm upset it's been brought forward.
DH and I both earn slightly above average wage. The cheapest 3 beds in my area go for about £200K. We've given up on the idea of owning because the idea of saving more than my gross annual salary in deposit was so out of reach we felt we would never be able to buy a house. Being able to get a mortgage with 5K of savings is probably achievable at some point. It would mean that we had to cut back a lot and save very hard, but we would do that to get the security of being homeowners.

My worry with the scheme is though that it will push prices up further and so out of reach by the time we had saved. Our local council was running a similar scheme that was limited to first-time buyers and properties below £250K - which seems more sensible.

I wish councils could just be able to build more houses. And that the law on private renting would allow people like me more stability. I would be happier renting if I had more security. Buying houses seems like such a gamble with this scheme as there is uncertainty around interest rates and house prices falling.

NicholasTeakozy Mon 30-Sep-13 09:33:29
ihategeorgeosborne Mon 30-Sep-13 12:48:40

It's a ridiculous policy. I've been saving to buy a house for 7 years now. Since this scheme was announced, house prices have risen 10% in my area. They should just leave well alone. Banks aren't lending more than 80% LTV as they think houses are over priced. Also, if this scheme is to help FTBs, why the need to lend up to 600k? Someone's gonna get rich out of this from tax payers money and it aint gonna be FTBs hmm

BlatantRedhead Mon 30-Sep-13 12:52:52

DO and I were discussing doing this as it's the only way we'll ever be able to afford a house of our own - the only people (of our age) we know who own their own houses have only managed that through inheriting money for a deposit..

To be honest I'm a bit dim in economics and the housing market and don't really understand why it's a bad idea. Not being twee, I genuinely don't understand. Can someone explain?

BlatantRedhead Mon 30-Sep-13 12:53:10

*DP

ihategeorgeosborne Mon 30-Sep-13 13:01:38

My take on it Blatant, is that houses are already massively over-priced, due to 300 year low interest rates, quantitative easing, funding for lending and all of these subsequent help to buy schemes. Basically, the government will guarantee the bank 15% of the loan of the property which you buy, so if you default and get re-possessed, they will not be liable for the loss, the tax payer will. Now, the problem is that interest rates will not get any lower. At some point they will have to rise. If you've borrowed the maximum amount you can afford and interest rates rise even 1%, will you still be able to pay your mortgage? If not, then I'd seriously think about embarking into this CON. Dh and I want to buy a house, but I just can't bring myself to risk it with this. Something just doesn't sit right with me. I think the shit will hit the fan in the next couple of years. I think they've kicked the can as far down the road as is possible with house prices.

BearsInMotion Mon 30-Sep-13 13:03:09

It's the only way I'm likely to ever own a property, but that doesn't mean I think it's a good thing - it will inevitably lead to a bubble and make it even harder for those a few years younger to buy sad

PlayedThePinkOboe Mon 30-Sep-13 13:03:34

Madness.

ihategeorgeosborne Mon 30-Sep-13 13:09:36

We are in the same situation Bears and we are in our 40s with 3 dc, but I'm shit scared of this scheme TBH and the subsequent fall out will be nasty. I just don't know what they're thinking of.

NicholasTeakozy Mon 30-Sep-13 13:16:05

If anybody follows Max Keiser he's been predicting a bubble for ages, going so far as to call it a ponzi scheme. Wages are stagnating (at best), cost of everything else is galloping ahead, although the official inflation rate doesn't reflect that, and when interest rates go up many people are going to go under.

BlatantRedhead Mon 30-Sep-13 13:17:45

Thanks IHGO, that sounds shit! Won't loads of people buy into this though? If people get the max mortgage they can afford then interest rates go up then the government. Is essentially giving thousands of people home s and then taking them away again, with black marks on those peoples credit records? hmm Am I getting that right?

Will discuss with DP

BlatantRedhead Mon 30-Sep-13 13:18:22

Sorry about typos - am on the phone!

Meglet Mon 30-Sep-13 13:25:14

nicholasteakozy is it the Russia Today Max Keiser? There's a couple of similar people on twitter.

ihategeorgeosborne Mon 30-Sep-13 13:36:46

The thing is though Blatant, the banks won't care because they'll have the government guarantee in their pockets and this government won't care either as they'll be long gone. The new government will have to pick up the pieces though and it won't be pretty. They'd have been far better off investing the same amount of money in house building.

NicholasTeakozy Mon 30-Sep-13 13:50:09

That's the fella Meglet. He was on Newsnight a while back saying exactly the same thing. He also says we should be jailing the corrupt bankers, so he's not all bad. I like his show, some of the people he has on explain in simple terms how we're being fucked over for profit in terms even I can understand.

ihategeorgeosborne Mon 30-Sep-13 14:11:04

The bottom line is, the government wants to win the next election and the banks will continue to get rich from this scheme on the backs of everyone else as per usual. The only people who will benefit are the already rich as usual. I tell you these people are as corrupt as it gets and I've reached a point where I can't sleep at night for worrying what the hell they're going to do next.

Meglet Mon 30-Sep-13 15:05:41

Thanks NT. I've got the right one now.

I'll keep an eye on RT for him. I get odd flashes of understanding this whole financial mess, and then it slips out of my grasp again blush.

Viviennemary Mon 30-Sep-13 16:36:27

I think compared to the average wage houses are hugely over-priced even in a lot of areas outside London. I think they should have been allowed to fall in a natural way without interest free loans to help people pay a massively huge deposit for a massively overpriced house. Even an interest free loan will still have to be paid back eventually.

78bunion Mon 30-Sep-13 16:49:48

Market interference is rarely a good idea including in the setting of interest rates.

3asAbird Mon 30-Sep-13 18:35:15

I asked a friend who,s buying other day he brought before scheme started but he said that the deposit has to be paid back within 5 years or it will start accruing interest he did not say how much?

But 5 years not a lot of time really.

I think its nuts up to 600k and include,s 2nd home owners.
600k buy a mansion outside of London.

We private rent hate it would love to see more social housing and better rights for tennants like in Europe.

Cant see us ever buying as im 30s husbands early 40,s
maybe if mil dies but then guess we be too old and house prices still be sky high.

mizu Mon 30-Sep-13 19:11:13

Another one here who is renting but would love to own.

I am 40 and DH 36.

We have saved £7000 in just over a year.

We both earn a fair bit less than national average.

The scheme sounds like a chance for us to get a house - but I am really wary of it. Especially the paying back the loan bit - how are people going to be able to do that within 5 years AND perhaps pay higher interest rates as well as the mortgage?!

78bunion Mon 30-Sep-13 19:33:11

(It does not apply for buy to lets or second homes by the way)

Useful Q&A on here www.ft.com/cms/s/0/5d17b534-29bb-11e3-9bc6-00144feab7de.html#axzz2gOxgFON0

See also https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-mortgage-guarantees. The 95% ( help to buy) which is not yet available does not have to be a new build.

The already in place Help to Buy is only for new builds (20% from the state) No fees in years 1 - 5 and 1.75% of the 20% after that https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-mortgage-guarantees

noddyholder Mon 30-Sep-13 19:49:22

Once interest rates rise (which they will) and you have to pay back the loan it will all seem like a very bad idea.

breadandbutterfly Mon 30-Sep-13 22:57:39

Can I clarify - there is no loan from the govt available or offered for those using the new Help To Buy Mortgage Guarantee scheme to buy a non new-build. For those wanting to use the new scheme to buy a non- new-build, they will need to apply for - and have earnings high enough to get - a 95% mortgage, same as now. There seems to be some confusion on this thread with the earlier Help to Buy Equity Loan scheme (for those buying new builds ONLY) which offered a 20% equity loan from the govt, which started costing lots of interest on top of the mortgage, if not paid back within 5 years - clearly a bad idea.

The mortgage guarantee scheme is not really as revolutionary as it is being made out to be - the only difference to now is that the govt will guarantee the lender that if prices fall and your property is repossessed, they ie the taxpayer will pay the lender the next 15% of the value of the property - on top of your 5% that the lender has taken too. So the govt guarantee is not to protect the buyer, it is to protect the lender.

The only supposed benefit for would-be buyers as a result of this guarantee, is that banks are supposedly going to offer 95% mortgages at better rates than they do now, when all the good rates go to buyers with large deposits of their own. But 95% mortgages are already available and the rates on the open market don't sound very different from those mooted as likely under the new scheme eg the Telegraph suggests rates of 4.5-5% for a 2 year fix, which is worse than you can get currently anyway.

So suspect the scheme will actually make very little difference to first time buyers, whose problem is that house prices are just FAR TOO HIGH. They would be foolish to take out a 95% mortgage on a 2 year fix when rates are at historic lows and about to rise, unless they are sure their earnings are likely to rise soon too considerably to keep up with the costs once interest rates shoot up.

The govt has introduced this prior to the election to try to ramp up prices and bring on a housing inspired boom to present the image of a growing economy - just in time for it all to crash the second the election is out the way.

katieperez Tue 01-Oct-13 12:24:12

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Rotterwallah Tue 01-Oct-13 12:39:53

I hear what you are saying (not you katieperez) and i do understand, but..there is a whole generation of people who are entirely unable to buy a home. we can easily afford a mortgae, even with interest rate rises, most of us are paying rents in excess of what a mortage on an equivalent house would be.
It is just that saving £20 - £40K for a deposit on an averagely priced home is unachievable

we are in our early 30s, we earn about the national average, mid £20ks, we have worked our entire adult lives. everyone i know is in the same boat, no one, and i'm not exaggerating, has been able to buy a house without help from parents or an inheritance

yes, home ownership isn't everything, but most of us are delaying starting families because of the insecurity of renting, then we run into fertility issues. housing is a big issue for anyone aged 20ish - 35ish

it's fucked up, and for a lot of people this scheme is a faint glimmer of light at the end of a long, dark tunnel

mizu Tue 01-Oct-13 18:09:48

Agree Rotterwallah, we could easily afford a mortgage - pay rent and save £500 a month for a house deposit.

I think I may take a trip to a mortgage advisor (independent?) and just see where we are at.

dialpforpizza Wed 02-Oct-13 01:16:16

Presumably, the tests relating to credit-worthiness, income & affordability are still going to be pretty stiff but, if the mortgagee defaults, the hit would be split between the bank and the exchequer rather than just one or the other. Spreading the risk.

Not sure it's safe to presume anything. And just why the tax payer should be absorbing any further risk brought about by the darn shoddy risk taking of our finanical institutions is utterly beyond me. They should hang their heads in shame.

Apart from that, am I right in thinking absolutely no-one on this thread, right, left or centre, thinks this is good idea? Except those who are understandably tempted by the carrot of home ownership, although most (on this thread) are still hmm about it?

Vince Cable is the only proven voice of reason on the economy, no-one listened to him before the crash, we need to now.

78bunion Wed 02-Oct-13 06:37:53

I think it's a good idea.

fedupandexhausted Wed 02-Oct-13 07:44:44

I also think it's a good idea. People spouting when they don't even understand the scheme are hardly the voice of authority. This new scheme has no equity loan which needs to be paid back - people still need to pass the affordability criteria for paying the mortgage. It's just part of the mortgage is guaranteed should someone default. I really hope it gets things moving again and people who are struggling to raise huge deposits to buy or upsize will be able to.

Rotterwallah Wed 02-Oct-13 07:48:38

The people who could benefit are tax payers also

breadandbutterfly Wed 02-Oct-13 10:06:42

fedupandexhausted - I am against this policy massively even though we rent and in theory this policy is aimed at us - because, contrary to your claim that "people still need to pass the affordability criteria for paying the mortgage", and therefore can pay the mortgage, mortgage rates now are ridiculously low by historic standards, and when they rise - which the markets expect to be within a couple of years - then those supposedly "affordable" mortgages will be anything but.

Affordability assessments which only look at whether you can afford the mortgage based on current rates are meaningless - the fixes offered under the scheme will last for 2 years, the mortgage for 25. If you take out a 95% mortgage, you will be on the hook for that money for 25 years, no matter whether house prices fall, interest rates rise or you lose your job. There is 0% chance that current rates will last for the full term of the mortgage - there is a reason you cannot get a 25 year 95% mortgage at those rates or even a five or ten year mortgage. As soon as artificial bucks to the market like Funding for Lending, Help to Buy, and QE are stopped, interest rates and mortgage rates WILL rise - a lot. This will happen within 3 years at most. So do not take out a 95% mortgage unless, as I said, you are sure your income will rise a lot within the next few years to cover higher rates when they appear - which they will.

Because when that happens, a lot of people will need to sell = more supply and lower demand = lower house prices. If you're buying to live in not "invest", it doesn't matter - as long as you can afford the mortgage.

breadandbutterfly Wed 02-Oct-13 10:09:59

Incidentally, hardly reported but of much greater significance to those who rent is this:

www.theguardian.com/money/2013/oct/01/landlords-pickle-tenants-charter

Eric Pickles' plan to allow tenants to demand longer tenancies, expected to be between 2 and 5 years. This would go some way to giving tenants the security of tenure enjoyed by renters on the Continent, and is way overdue.

dialpforpizza Wed 02-Oct-13 11:14:02

That looks to be promising breadandbutterfly, about time too.

Fedupandexhausted, you have to admit it is unusual for a thread like this to be pretty much unanimously against, I couldn't quite believe what I was reading; and I didn't say the voices here are the ones of authority, I said Vince Cable's was.

dialpforpizza Wed 02-Oct-13 11:42:56

The people who could benefit are tax payers also

If you were referring to my post about the tax payer absorbing the risk, then yes, that should probably have read "public money" - no digs at low or non tax payers or in fact tax payers at all. I was referring to the use public money, which we all have a right to be concerned about.

The people who benefit by getting on the ladder, will also be on the receiving end of the risk if it all goes belly up, along with everyone else apart from the banks as their dosh will be guaranteed by the state.

I have to admit I am confused by it all and I think that there are hundreds out there equally as confused.

I am a renter and can afford my rent but could not get a mortgage for the value of property for the size needed. I know of a few people who believe this to be a scheme whereby the govt will give the buyers a deposit of x amount meaning there deposit will be bigger and therefore able to get a bigger mortgage? After reading this thread that obviously is not the case and so I think a lot of people are in for a huge disappointment.

If something seems too good to be true it usually is.

breadandbutterfly Wed 02-Oct-13 18:25:28

Dontletthemgetyoudown -

I agree it is confusing and I think deliberately so. The Tories have never had any interest in helping FTBs and this policy does not do so. It enables a few who can already qualify for a 95% LTV mortgage to get a slightly cheaper one - but for 2 years only. And then they are screwed - as the policy provides no long-term support, and interest rates shoot through the roof (as a welcome gift to the new Labour govt to deal with?).

It also allows FTBs to buy an over-priced new build and lends them some more cash on top of their already-huge mortgages so they can get around the affordable-lending criteria the govt supposedly espouses. Then after 5 years - as interest rates go through the roof - it demands this loan back along with loads of extra interest.

Cue loads of recent buyers way over their heads in debt, sky-high interest rates, and huge amounts of property repossessed, prices down low. I'll leave you to imagine what cash-rich Tories and their cronies plan to do when this happens - is it bail out the unfortunate buyers or fill their boots with cheap properties??

Beware Tories bearing gifts. It's no free money. The free money is for house builders and banks ONLY.

You'll notice that all the positives are neatly timed to occur before the election - nicely rising house prices fanned by taxpayer-funded bungs.

The shit is due to hit the fan the second the election is out the way - that's when interest rates rise and the two-year fixes end.

THINK AHEAD before you vote.

dialpforpizza Wed 02-Oct-13 18:44:56

Spot on, Breadandbutterfly.

Damnautocorrect Wed 02-Oct-13 18:50:49

I do think its brilliant it's not just for new builds. This incessant need to keep building new homes makes me so cross, there's no need for the amount of countryside destruction (and wildlife desimation) that there is.

I'm a renter and exactly the person this is aimed at, the long term affect worries me, e.g false rise in house prices, interest rate rise, after 2 years will they be able to renew at a decent rate?

Marisson546 Thu 03-Oct-13 13:22:01

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Solopower1 Sun 06-Oct-13 19:08:50

Thank you, Breadandbutterfly, for clarifying.

I have never owned a house. I really wanted to when my children were younger, but could never afford one as a single parent on a teacher's salary. We lived in a three-bed council house for 16 years, and in those days I was able to feel secure as long as I kept paying the rent. The rent I was paying went into the maintenance and upkeep of the council housing stock. It was a good, fair system. It didn't cost the state anything, because we paid our rent and it covered the costs. The people on housing benefit would have been receiving HB whether they rented from the council or private sector. The difference is that the HB they were receiving went back to the council, and not into the pockets of private landlords.

A lifetime of renting in those circumstances wasn't too bad, and took the edge off not ever being able to buy. But a lifetime of insecurity in the private rented sector (and I have now spent 12 years paying rent to private landlords) can be sheer hell when you have young children.

The answer to the housing crisis is to build more council houses and to occupy the empty buildings bought as tax scams. There is nothing else the govt can do that will make the situation any better. First time buyers could spend a few years paying a rent to the council that covers the costs and doesn't include a huge profit for a landlord. That might make it possible for them to save. But the govt won't do that, because they don't want house prices to go down. So they fiddle around producing stupid schemes to try to make themselves look good.

We are constantly being let down by this government.

Solopower1 Sun 06-Oct-13 19:10:27

Damnauto - I agree: no more building on green belt. There are plenty of brown field sites that should be used.

Thecatisatwat Thu 10-Oct-13 11:16:09

I think in principle the help to buy scheme is a good idea but think it should have remained only available to FTB and newbuilds (a limit of £600000 seems crazy). It will allow a lot of people who are paying ridiculous rents to finally get a step on the housing ladder because previously they could not afford said ridiculous rent plus saving for a deposit plus rising living costs). My niece and her boyfriend are buying a house this way and will be paying a lot less on their mortgage for a two bedroom house than on their rented one bed flat. They intend to spend that saving on paying off the capital on the house rather than lining the pockets of a landlord.

Have economists taken into account the possible effect of this on the rental sector? Hopefully it will cause the bottom to fall out of the rental market and a) rents will drop and b) house prices will fall because there will be less demand for people buying houses to rent out (sorry, very little sympathy for buy to let landlords).

And failure to be able to afford their mortgage when interest rates rise is obviously going to be a problem for a hell of a lot of people, not just those on help to buy schemes (in fact I read the other day that help to buy scheme mortgages tend to have higher rates anyway, so are perhaps less vulnerable to rises?).

HesterShaw Thu 10-Oct-13 18:45:34

Are all the people who think it's a totally mad idea homeowners themselves?

NicholasTeakozy Thu 10-Oct-13 19:46:01

It's a scam according to this article. It's a Ponzi scheme, according to Max Keiser. Even Gidiot has admitted he sees house prices rocketing in the short term. He's right about that. But then even a stopped clock is right twice a day.

Because this is for new houses only, and house building is at an all time low, prices will rocket only to slump when interest rates go up and people struggle to make repayments on their diminishing incomes. There are three groups who will benefit from this: the banks, because part of the loan is guaranteed by us. The house builders, who are set to make a killing and, further down the line, cash rich people who'll snap up repossessed houses for next to nothing.

And no Hester, I'm not a homeowner.

williaminajetfighter Thu 10-Oct-13 20:36:40

The mind boggles. The need for low cost housing has never been greater not has the need to get developers building on sites they are holding onto. This seems to be the general consensus from the public and yet.... We get the opportunity to buy a crappy new Barrat Box home instead which truly most benefits the developers. Delightful.

breadandbutterfly Fri 11-Oct-13 12:38:39

@ HesterShaw - no, I'm not a homeowner and I am vehemently against this scheme. It is designed to make buyers imagine that (a) house buying is more affordable and (b) they must buy now!!! before prices rise further. The media is assiduous in pushing both these lines. Neither is true - the latter becomes a self-fulfilling prophecy as it is repeated by the newspapers, but there is nothing inherent in the scheme that makes it easier for FTBs to buy and hence pushes up prices. All it does is supply 95% percent mortgages. But these were available BEFORE the govt introduced this scheme, and at CHEAPER rates. So FTBs could have got a mortgage with a low deposit already - this scheme added nothing.

The PUBLICITY, however, has worked wonders, for terrifying FTBs into buying an over-priced rabbit-hutch, just in time to push prices up before the election. And give a 'feel-good' factor to the economy. And then pronto - interest rates rise as soon as the election is out the way, said FTBs can't afford their huge mortgages, get repossessed, but that's OK, because the banks are protected by the taxpayers, while the Tories and their cronies get to snap up some cut-priced repossessions.

Trebles all round!

Also, forgot to add that the govts' balance sheet is helped by the fact that the lenders have to pay for the govt guarantee - about £1000+ per mortgage. So for every 1000 over-priced mortgages the govt manages to persuade mugs FTBs to take on, the govt gets another billion in its coffers to help ease the problems its caused by mis-managing the economy. So lots of free Wonga leading up to the election, to bribe the electorate with/pretend the Tories haven't ballsed up the public finances. Then as soon as the election is out the way and this scheme is phased out, the pendulum swings the other way, as the taxpayer starts to be hit for the billions in mortgage guarantees.

@ NicholasTeakozy - it is not only for new builds. That was the first part of the scheme. The most recent part applies to any property.

ttosca Fri 11-Oct-13 13:18:49

Osborne reveals the true aim of Help to Buy: to inflate house prices

"Hopefully we will get a little housing boom and everyone will be happy as property values go up," the Chancellor reportedly told the cabinet.

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Mervyn King once memorably complained of David Cameron and George Osborne's "tendency to think about issues only in terms of politics, and how they might affect Tory electorability". Rarely has there been a better example of this than the Help to Buy scheme.

While Cameron and Osborne publicly state that the aim of the policy is to help first-time buyers, their real aim is to create a pre-election feel-good factor among Tory-leaning homeowners by inflating prices. With the cap for support set at a £600,000 (the average house price is just £172,000), Help to Buy will act as a giant state subsidy for homeowners seeking to trade up or borrow against the value of their property.

Today we learn that Osborne has told the cabinet as much. The Independent's Andrew Grice quotes the Chancellor as saying: "Hopefully we will get a little housing boom and everyone will be happy as property values go up."

This is undoubtedly smart politics; 45% of homeowners voted Conservative in 2010 and are more likely to remain loyal to the party if they're feeling flush by 2015. But it is terrible economics and a policy that no one genuinely committed to expanding home ownership should support.

Even while allowing some to make it onto the ladder, the scheme risks blocking the route for others by further widening the gulf between prices and earnings. There is much that the government could do to ease the housing crisis, including increasing supply by allowing councils to borrow to build (as Vince Cable has proposed), penalising developers who sit on unused land, and improving conditions for private tenants. But none of these objectives are aided by an electoral bung less aimed at delivering more homes than more votes.

www.newstatesman.com/politics/2013/10/osborne-reveals-true-aim-help-buy-inflate-house-prices

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