Help To Buy is in a mess - here's how Osborne can rescue it

To avoid a "second home subsidy", the government must limit the scheme to first-time buyers.

The government’s Help to Buy scheme - a handout to the big beasts of the construction industry wrapped up as a fluffy social policy giving the hard pressed a leg up - has had an inauspicious start to life.

The scheme will share out £3.5bn in interest-free loans to buyers who can rustle up a mortgage deposit of just 5 per cent, each loan offering up to 20 per cent of the value of a new-build property worth £600,000 or less, and taxpayer backing for up to £130bn of mortgage lending.

From the off, the policy faced criticism for artificially stimulating the housing market, threatening another disastrous cycle of boom, bubble and bust.

Even the Treasury select committee felt moved to share its concerns about the risks of channelling public money into an investment whose value - like all good property speculators know - could go up as well as down.

But the biggest problem with Help to Buy is the loophole in the mortgage guarantee scheme that will allow existing home owners access to a loan. Parodying the government’s own 'spare room subsidy' (or 'bedroom tax'), shadow chancellor Ed Balls found a new moniker for the policy: "the second home subsidy".

On BBC1’s Sunday Politics show this week, Conservative MP Nadhim Zahawi was challenged on this issue yet again. He gave a halting and stumbling response, which cleared absolutely nothing up and raised new fears about the perverse impact these loans might have.

Asked what the government could do to stop the policy being used to buy second properties, Zahawi said:

One of the things we have to look at is the detail. How do you decide? If parents want to help get [children] to get a 5 per cent deposit in place or if someone is selling a smaller property to help their family into a bigger place?

Clear as mud. But look again at what he asking us to consider: how do you decide if a parent purchasing a second home to help their child onto the property ladder - buying it for them, or with them, or using their existing owner occupied property as leverage - is using or abusing equity loan scheme?

It’s worth remembering that, when he unveiled Help to Buy in the Budget, chancellor George Osborne said that home ownership was now "beyond the great majority who can’t turn to their parents for a contribution. That’s not just a blow to the most human of aspirations, it’s a setback to social mobility."

What is this fudged idea over public funding for second homes if not a double-bolted cap on social mobility?

Allowing parents to purchase a second home through to the scheme to support their younger family members removes the opportunity of government support from the children of those who could never offer them an independent leg up, and uses public funds to consolidate wealth in the hands of those who already have it. And if that’s the case, it must be stopped. Immediately.

Writ large, a policy like this only exacerbates social inequality, with its disastrous consequences for us all (no need to rehash the excellent work of Richard Wilkinson and Kate Pickett here). It’s not clear that this is exactly what Zahawi meant in his fumbled answer to Andrew Neil’s forensic questioning; perhaps he was just having a bad morning, or feared falling foul of the party machine. Either way, a vacuum will be filled with speculation, so government must clarify exactly how, and by whom, Help to Buy will be accessed.

Another dangling question for the coalition is whether Help to Buy has actually pushed the construction industry to develop more homes? We know there is demand for decent housing; the problem is with the lack of supply. Builders aren’t building, and where they are they’re not building the right sort of homes.

As David Orr, chief executive of the National Housing Federation, explained in his response to Help to Buy: "Our housing market has long been weakened by the lack of new houses being built... the government should be focusing on unlocking investment to build more new homes as a way of managing down the housing benefit bill and boosting the economy."

If the policy has only managed to put down the foundations for £600,000 Barrett ‘dream homes’, what is its value to first time buyers?

But listen up, Osborne, because you can rescue Help to Buy with three simple measures:

1. Reduce the limit to 20 per cent of any property valued at the national average of £238,293, rising to £350,000 for London and the South East.

2. Only allow first-time buyers to access the mortgage guarantee scheme.

3. Only open the scheme up to properties with three bedrooms or less, forcing developers to build the type of affordable housing that is so desperately in demand for first-time buyers.

The Chancellor may feel reports that house prices are on the rise for the first time since 2010 confirm that his policy is working. I believe it demonstrates quite the opposite.

George Osborne meets with a couple at the Berkeley Homes Royal Arsenal Riverside development in Woolwich. Photograph: Getty Images.

Hannah Fearn is contributing editor of the Guardian local government, housing and public leaders networks

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This week, a top tip to save on washing powder (just don’t stand too near the window)

I write this, at 3.04pm on a sticky Thursday afternoon, in the state in which Adam, before his shame, strolled in the Garden of Eden.

Well, in the end I didn’t have to go to Ikea (see last week’s column). I got out of it on the grounds that I was obviously on the verge of a tantrum, always distressing to witness in a man in his early-to-mid-fifties, and because I am going to Switzerland.

“Why Switzerland?” I hear you ask. For the usual reason: because someone is paying for me. I don’t think I’m going to be earning any money there, but at least I’ll be getting a flight to Zurich and a scenic train ride to Bellinzona, which I learn is virtually in Italy, and has three castles that, according to one website, are considered to be “amongst the finest examples of medieval fortification in Switzerland”.

I’m not sure what I’m meant to be doing there. It’s all about a literary festival generally devoted to literature in translation, and specifically this year to London-based writers. The organiser, who rejoices in the first name of Nausikaa, says that all I have to do is “attend a short meeting . . . and be part of the festival”. Does this mean I can go off on a stroll around an Alp and when someone asks me what I’m doing, I can say “Oh, I’m part of the festival”? Or do I have to stay within the fortifications, wearing a lanyard or something?

It’s all rather worrying, if I think about it too hard, but then I can plausibly claim to be from London and, moreover, it’ll give me a couple of days in which to shake off my creditors, who are making the city a bit hot for me at the moment.

And gosh, as I write, the city is hot. When I worked at British Telecom in the late Eighties, there was a rudimentary interoffice communication system on which people could relay one-line messages from their own computer terminal to another’s, or everyone else’s at once. (This was cutting-edge tech at the time.) The snag with this – or the opportunity, if you will – was that if you were not at your desk and someone mischievous, such as Gideon from Accounts (he didn’t work in Accounts; I’m protecting his true identity), walked past he would pause briefly to type in the message “I’m naked” on your machine and fire it off to everyone in the building.

For some reason, the news that either Geoff, the senior team leader, or Helen, the unloved HR manager, was working in the nude – even if we knew, deep down, that they weren’t, and that this was another one of Gideon’s jeux d’esprit – never failed to break the monotony.

It always amused us, though we were once treated to a terrifying mise en abîme moment when a message, again pertaining to personal nudity, came from Gideon’s very own terminal, and, for one awful moment, for it was a very warm day, about 200 white-collar employees of BT’s Ebury Bridge Road direct marketing division suddenly entertained the appalling possibility, and the vision it summoned, that Gideon had indeed removed every stitch of his clothing, and fired off his status quo update while genuinely in the nip. He was, after all, entirely capable of it. (We still meet up from time to time, we BT stalwarts, and Gideon is largely unchanged, except that he’s now a history lecturer.)

I digress in this fashion in order to build up to the declaration – whose veracity you can judge for yourselves – that as I write this, at 3.04pm on a sticky Thursday afternoon, I, too, am in the state in which Adam, before his shame, strolled in the Garden of Eden.

There are practical reasons for this. For one thing, it is punishingly hot, and I am beginning, even after a morning shower, to smell like a tin of oxtail soup (to borrow an unforgettable phrase first coined by Julie Burchill). I am also anxious not to transfer any of this odour to any of my clothes, for I will be needing them in Switzerland, and I am running low on washing powder, as well as money to buy more washing powder.

For another thing, I am fairly sure that I am alone in the Hovel. I am not certain. To be certain, I would have to call out my housemate’s name, and that would only be the beginning of our problems. “Yes, I’m here,” she would reply from her room. “Why?” “Um . . .” You see?

So here I lie on my bed, laptop in lap, every window as wide open as can be, and looking for all the world like a hog roast with glasses.

If I step too near the window I could get arrested. At least they don’t mind that kind of thing in Switzerland: they strip off at the drop of a hat. Oh no, wait, that’s Germany.

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times