Why a helping hand is not good news for all buyers

Anything that allows young people to achieve the dream of their own space has to be unreservedly welcomed.

So the news that the Scottish Government is extending its ambitious Help to Buy scheme for another two years is good news to hopeful buyers for whom the prospect of a home of their own has inched closer to reality.

First-time buyers and existing home owners can support their purchase with the help of a 5 per cent deposit and a 15 per cent interest-free government equity loan.

The scheme, which concentrates on new properties valued at up to £200,000 will cost a further £100 million over a two-year period starting in April next year.

This is on top of a massive ongoing investment which, since 2013, has helped more than 12,000 households to realise their property ambitions. The extension should benefit another 4,000 households.

This is laudable, but it is also quite reasonable to ask pertinent questions based on the old legal dictum of cui bono, or “who benefits?”.

Clearly, the buyers in the schemes are primary beneficiaries, as are the wider public who should gain from speculative development, construction employment and knock-on gains down the supply chain.

Builders too have been incentivised by the schemes and are more able to make their properties achievable without a purchaser having to raise a deposit of up to 20 per cent, an insurmountable obstacle for many people.

However, the other question is “who loses?”. It could well be argued that the people most disadvantaged are buyers and sellers in the much larger second-hand housing market.

There are countless prospective first-time buyers trying to gain a foothold through the traditional route of buying a home previously owned by someone else. Why should government assistance be withheld from this sector?

Sales of secondhand homes vastly outnumber new build sales in Scotland and they contribute quite as much to the economy through subcontractors and trades people carrying out home improvements, extensions and alterations.

Some observers have concerns that an unintended consequence of the schemes could be price inflation, with builders able to use the incentives to generate premium prices, as well as the upsizing effect for existing homeowners.

We need new homes. There is no question of that, but is it really in the wider market’s interests if the new-build sector is encouraged to gorge on a diet of government incentives which it receives to the exclusion of other property types?

It is legitimate to ask if Help to Buy schemes simply push up prices across the board while funnelling funds into one, subsidised, sector.

If the aim is to help firsttime buyers, why is that help confined to five to 10 per cent of the market?

Scottish housing minister Kevin Stewart has said in relation to the extension of the schemes that “housing is about more than bricks and mortar”. He is absolutely right. As well as new developments, it is also about the huge previously-owned market and concerns about that should perhaps also be given some ministerial attention.