Echoes of Thatcher in ‘radical’ help to buy scheme

The Chancellor christened the scheme ‘help to buy’ in a deliberate move to echo the ‘right to buy’ scheme of the Margaret Thatcher government which allowed people to buy their council homes and became a byword for Conservative support for aspirational families.

Under ‘help to buy’, buyers of new houses will be able to borrow up to 20 per cent of the cost from the Government interest-free for five years.

The Government is also offering a mortgage guarantee scheme to lenders which will encourage them to give mortgages to buyers of both new and existing homes who have a five per cent deposit.

Unlike previous initiatives, help to buy will not be limited to first-time buyers.

George Osborne said nothing symbolised aspiration more than the desire to own a home but that had been put out of reach for thousands of people.

Help to buy would tackle that problem in a “dramatic way”, he said.

Business Secretary Vince Cable told the Yorkshire Post: “I think the housing proposals are very radical.

“We are making it much easier for people to get mortgages, and effectively guaranteeing the mortgage system – it’s the Canadian model.

“This is very, very radical stuff. I think it will stabilise the housing market and make it much easier for developers to come forward with schemes.”

Since the financial crash, mortgage providers have been demanding larger deposits, making it harder for young people to get on the housing ladder which in turn has made it harder for families to move.

The difficulty accessing mortgages has also had a significant impact on the housebuilding industry which has struggled to find customers to support new developments.

Mike Farley, chief executive of York housebuilder Persimmon, said: “Housebuilding has a key role to play in the economic recovery and we welcome the measures to extend the scope and duration of the successful FirstBuy shared equity scheme.

“Extension gives the industry the long term certainty it needs and the expanded help to buy scheme will now give thousands of existing homeowners a much-needed helping-hand up the housing ladder, as well as continuing the welcome support to first-time buyers.

“With the Government now giving an equity loan of 20 per cent to cover the deposit of anyone buying a new-build home, help to buy will be particularly helpful to capital constrained small and medium-sized housebuilders, providing a boost to sales and build rates, which should be good news for jobs and economic growth.”

Mortgage providers said they were ready to work with the Government on the help to buy scheme.

Peter Hill, chief executive of Leeds Building Society, said, “We very much welcome the support for home ownership announced today.

“Whilst we need to work through the full details of the guarantee scheme announced, this is definitely a positive step for the housing market and the wider economy.”

Richard Davis, real estate tax director at Deloitte, said: “This has got to be a good thing because it will get more liquidity into the housing market.

“People haven’t been able to afford the mortgages they need to get onto the housing ladder so I think these measures are to be welcomed.”

But there was a note of caution from the Royal Institute of Surveyors that the Government should be wary of unintended consequences.

Chief economist Simon Rubinsohn said: “The devil will be in the detail about how the Government will treat buy-to-let and those in negative equity.

“RICS will monitor the impact on the market and prices. However, Government need to be careful this doesn’t create another housing bubble – pushing prices up at the expense of buyers.”