Fat cat builders rake in £170m thanks to your Help to Buy cash
THE bosses of ten of the country’s biggest house builders have seen their pay soar by nearly £170million since the launch of the taxpayer-backed Help to Buy scheme four years ago.
Almost a third of the 405,000 homes built since 2013 – 112,000 – have been bought by families using the controversial scheme, making it highly lucrative for fat cat developers.
Ten top firms, including Barratt, Redrow and Taylor Wimpey, made profits of £4billion last year, while their bosses earned £42.6million. That took their total pay since 2013 to £168million.
At the same time the industry has been criticised for shoddy workmanship and the sale of new homes with punishing lease agreements that include soaring ground rents.
It is also claimed that the scheme has helped the wealthy snap up new homes. Government figures show that 3,952 people who have used Help to Buy earn more than £100,000 and nearly 26,000 more than £60,000.
A government survey last year found 57 per cent of those using the scheme said they could still have afforded a home without it.
Critics said Help to Buy has pushed up house prices by boosting demand rather than supply, inflating developers’ profits.
Duncan Scott, of the campaign group Priced Out, said: ‘This scheme… [makes] it even more difficult for first-time buyers to get on the housing ladder.
‘Developers have been making huge profits in the last four years, building houses they would have built regardless. The Government should be helping builders build more homes, not sell the homes they are building anyway.’
Builders now fear the end of the scheme will harm business and are calling for it to be extended beyond the current deadline of 2021.
David O’Leary, of the Home Builders Federation, said: ‘It will be difficult to switch off when it is such as big part of what the industry has been doing. It is a key part of the sales environment.’
Under Help to Buy, families can buy new build homes worth up to £600,000 with deposits of only 5 per cent, and the Government provides a loan of 20 per cent interest-free for five years.
Two-thirds of homes sold by Gleeson are now through Help to Buy, according to analysts at stockbroker Liberum.
Gleeson made profits of £26.2million last year and paid its chief
‘Developers make huge profits’
executive Jolyon Harrison, 69, just under £3million, taking his total pay in the four years since Help to Buy was launched to £6.2million.
Larger rival Persimmon sold 54 per cent of its new homes through Help to Buy last year, when it made profits of nearly £775million and paid its boss Jeff Fairburn £2.1million.
Mr Fairburn, 50, now stands to get a bonus of £115million in shares as a reward for the company’s performance over the past few years.
One of the highest-paid building executives in the country is Pete Redfern, 46, of Taylor Wimpey, who was paid £3.8million last year, taking his earnings since 2013 to £23.2million. Taylor Wimpey made profits of £733million last year, when 45 per cent of its new homes were bought through Help to Buy.
The company has also been hit by scandal and has set aside £130million to resolve disputes over homes sold with leases that saw ground rents double every decade, crippling the families who bought them.
Bovis Homes has faced a barrage of criticism over the quality of its homes and has set aside £7million to deal with complaints about shoddy workmanship. Around a third of the homes it builds are sold through Help to Buy.
Ex-boss David Ritchie, 48, who quit abruptly in January after a profit warning, was paid £5.6million between 2013 and 2016.
Charlie Campbell, of Liberum, said: ‘Clearly Help to Buy has been great for the house builders. The number of houses being built would have grown because the economy has got better and mortgage lending has improved. Whether they would have done it on that scale or not without Help to Buy I don’t know.’
None of the builders commented.