Carrots, Not Sticks to get Housebuilders Building
Don’t get me wrong, we get that there’s an affordability problem for first time buyers in our housing market.
But I’m just not sure that encouraging people to make the biggest financial decision of their lives is going to fly in the face of Housing Minister Matthew Pennycook’s latest statement on the aim of government housing policy, to make house prices drop.
“It will take some time – even if we had high and sustained rates of housebuilding of the kind that we hope the reforms we’re making will secure – to see house prices drop,” said Matthew Pennycook.
So we scrimp and we save and we borrow to buy an asset that, if the Government gets its way, will only go down in value, trapping people on the first rung of the housing ladder even if they’re brave enough to jump on.
And at the other end, we have the mansion tax (if the Government ever works out how this can actually be implemented) trapping people at the top end of the ladder.
(And of course the people in the middle are trapped between the two, not to mention scared of losing their jobs as unemployment rises following punitive tax rises on business).
So here’s an idea.
We all know the 1.5 million new homes target is going to missed by a mile. Rather than wasting months looking at options, bring on Help To Buy #2 to create demand and get housebuilders building houses again (which in turn creates economic growth).
Research by the Home Builders Federation shows that the now-discontinued Help to Buy #1 “produced profit of £1.2m per day last year, having supported hundreds of thousands of first-time buyers”
So put that stick away and buy a bag of carrots. Stop fantasising about unachievable targets and ideologies while the housebuilding sector shrivels; instead encourage first time buyers to take the leap with support that helps everyone!
James Scott
MD
Sources:
https://www.telegraph.co.uk/money/property/buying-selling/labour-considers-new-help-to-buy-scheme/
https://www.hbf.co.uk/news/help-to-buy-generates-138bn-for-taxpayers-as-nearly-half-of-the-loans-are-repaid/
