Winners and losers in Help to Buy pledge
increased income and corporation tax paid by housebuilders plus stamp duty paid by homebuyers. However, the terms are so easy that the Treasury had to emphasise the scheme is not open to landlords and the Chancellor has stressed it is only intended for owneroccupiers. Although it remains unclear how these restrictions will be enforced.
The second part of the scheme will be available from January, giving those who wish to buy any home, whether new-build or existing properties, a governmentbacked guarantee on 20pc of the mortgage. This effectively means that mortgage companies shoulder less of the risk of bad debts, so should provide better mortgage deals.
But wishing is not quite the same thing as getting. Earlier attempts by the Government to stimulate the housing market have disappointed. For example, NewBuy, the existing, more limited version of Help to Buy, led to just 1,522 housing completions in its first nine months.
Lack of housing supply is a fundamental cause of homeownership becoming unaffordable. To take a very long view, last year I collated data from Halifax, Britain’s biggest mortgage lender, and Barclays Capital, an investment bank, to compare returns from housing and shares during the six decades of Queen Elizabeth’s reign.
Nearly 202,000 new homes were completed in the year before the coronation and new-builds peaked at 426,000 in 1968. That latter figure is more than four times the current rate of building. But during the same period, the population of Britain increased by more than a fifth from 50million to 62million.
Even if the population had remained static, demand for housing would have increased because fewer people now live in traditional families. The percentage of homes occupied by single people has soared from 19pc to 33pc, while the segment by married couples has nearly halved to 40pc today.
Another factor is that provision of housing association and council homes collapsed by 81pc, according to the Department for Communities and Local Government. Meanwhile, homeownership has doubled from 32pc of all households to 66pc last year.
Given those facts, perhaps it is no surprise that bricks and mortar have proved a much better long-term investment than shares. Halifax reckons the average house price was just £2,200 when Her Majesty ascended the throne, but is now nearly £164,000. That is more than three times the increase in inflation, as measured by RPI, over the period.
By contrast, £100 invested in a basket of shares representing the changing composition of the London Stock Exchange in 1952 would have grown to just £4,430. Bank deposits lagged even further behind, with a total return of just £250.
Help to Buy will ensure that bricks and mortar continue to deliver real returns to homeowners. But it is much less clear whether it will help homebuyers or what the “return” to taxpayers will be.
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