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.