My fiancée and I are in the fortunate position, through unfortunate circumstances and scrupulous saving, to buy a house with a decent deposit. And hopefully, soon, that will happen.
We’ve also been benefiting from one of the Government schemes to help people get on the property ladder for the first time, with having Help To Buy ISAs. They’re brilliant, and if there is one thing (and there is only one thing) I can praise the Conservative Government for, it’s that.
But everything else they’re doing is far, far off the mark.
They’re quick to spread the message about how many people they’ve helped.
“Since 2010, government-backed schemes have helped more than 362,000 households to buy a home of their own.”
And there’s been a “52% increase in the number of home built in past three years”.
Superb! Well, at least it is for the companies building the homes.
As far as I’ve been able to see, there are a few groups of people benefiting from Help To Buy mortgages and other schemes; and it isn’t people like me.
The Rich Get Richer
I will tell you the fundamental flaw with everything, having spent the past two years researching all the different home-buying options available to us.
It starts quite simply – New homes are not affordable.
There’s a village near us which I’ve had my eye on for a while. Although it may not have the best reputation, it is perfectly situated, yet far enough away from the hustle and bustle. This mix means it’s an affordable option.
It’s also benefiting from a boom as a result of hundreds of new homes taking over the fields.
The issue is that those new homes are, at least, 25% more expensive more than similar homes built a road away 20, 30, 40 and 50 years previously.
That means, with all the help the Government could throw at us to buy a new home, we’d be paying the same (if not more) for a home which has one less bedroom, a smaller kitchen, and considerably less garden, than the ‘second-hand’ homes.
And not only that, but I wouldn’t own 20% of the home still. That could mean I have to pay land rent, as well as the mortgage. And, when it came to selling the home five years later (which we’d have to do because we’re a bedroom down), 20% of the sale would go back to the Government.
That then means we have, say £40k less to buy our next home. At which point, we wouldn’t actually be able to afford a bigger home, and would still need to find extra money to afford it.
Well, in that scenario, it certainly isn’t us benefitting. Sure, it may be brand spanking new, but did you know a bathroom mirror is an optional extra when you buy a new home? You’ve paid over £200,000 and you don’t even get a bathroom mirror thrown in!
You probably only get one key and have to get extra ones cut yourself.
The Government looks good because they can throw around impressive figures about the number of people they’ve helped buy a home. But, I won’t be surprised if in 10 or 20 years’ time there’s an inquiry launched because you have a whole generation who were tricked into buying unaffordable housing.
The house builder gets big profits because people are actually buying their homes again. And as far as I can see, above market value too. A few years later, they then sell the land rents for their ‘affordable’ housing to an investment group, increasing their profits further and stiffing their customers even more.
And, of course, the mortgage companies are winning. After 2008 when they made it harder to get a mortgage, they were giving out fewer mortgages. Now, they’re able to give mortgages to the poor again. Hurrah!
The actual solution, to making homes affordable is – and bear with me because I know it is going to be difficult to get your head around – actually making homes affordable.
I know, revolutionary stuff.
And I’m not saying a magic wand is waved and house prices fall because that isn’t the answer.
But if you’re going to build new homes and put in place schemes to help people afford them, then they should be sold at the same value as other similar houses in the area. I think the term would be ‘market value’.
Why is a new home (which is very likely to have snagging issues and other problems), worth more than a home which is older?
The schemes then actually help people. Having a 5% mortgage becomes far more achievable, and the mortgage payments will be more affordable.
Or, rather than focusing on building 3, 4 and 5 bedroom houses so much (the development I’ve looked at has TWO homes which are 2 bedrooms, out of them all), build smaller homes instead.
Build smaller 2-bed houses for young couples (which are affordable, and not 25% more than similar houses). And build smaller homes for older people to move into, like bungalows, so that they can actually move out of their large homes, affordably and happily.
I am fed up of hearing people say that these new homes are the answer for my generation because they’re not. They’re cardboard with bricks built around them to make them look like houses. The home which is 30 years old, is not only cheaper but actually built solid by craftsmen.
And the article on the BBC News website which starts with the following sentence is actually what made my blood boil enough to write all this:
“Nearly eight out of 10 families across England are unable to afford newly built homes in their local area, a report by housing charity Shelter says.”
A Get Rich Quick Scheme
It is a scandal, and slowly, people are waking up to it. And the ‘£50bn by 2021’ which the Government is promising, is useless, and it’s more of the same.
That money, ‘given’ to first-time buyers goes to home builders and massively increases their profits. Of course, these are the same profits which the Government will heavily tax. After all, they can’t tax them if they don’t earn it.
But also, every Help To Buy house represents an investment for the Government. If they silently own 20% of most houses on multiple streets, they’ll get that 20% back when the houses are sold in the future – at the inflated price because house prices are rising every year.
The Conservative Government are not actually helping us Millennials buy unaffordable housing, they’re investing in us so that in the future we are the ones helping to pay back the deficit and to prop up the NHS and schools.
After all, the extra bit of money we’re going to get from our ISA is basically going to cover the stamp duty. The same stamp duty which goes to, you guessed it, the Government.
If they were actually helping us, they wouldn’t kick the boot in after all of that, and charge us a tax for buying the houses they want us to buy.