New figures show supports for British controversial housing scheme

GMT 17:42 2014 Thursday ,29 May

Arab Today, arab today New figures show supports for British controversial housing scheme

Housing scheme in British
London - XINHUA

New data published on Thursday by the Treasure gave some supports on the controversial Help to Buy scheme, showing it is not fuelling a housing bubble.
The first comprehensive statistical report on the Help to Buy which kicked off last April and aimed to help buyers with small deposits to purchase homes, showed that a total of 27,861 properties have been helped by the scheme so far, which accounted for only three percent of overall house sales.
The report showed that among the property sales helped by the scheme, 85 percent were first-time buyers. 74 percent of homes bought were new-build properties, while over 94 percent remained outside London.
The first phase of Help to Buy was an equity loan which gave prospective buyers a loan of up to 20 percent of the purchase price of a new property for anyone with a 5 percent deposit. The second - and more controversial - phase, launched last October, was a mortgage guarantee that can be used to buy existing properties.
While the average housing price in Britain had increased 8 percent in the past year and 17 percent in London, the Help to Buy program was facing renewed criticism that it was fueling a boom in the market.
Jonathan Portes, director of National Institute of Economic and Social Research, was a staunch opponent of Help to Buy. He claimed that since mortgage availability has improved, there was no need for further intervention.
"At a point when prices are rising, it will just make it more difficult to withdraw further along down the line. It will be very difficult to end it when the market is going up, and even more so when the market is going down," he said.
"The government claims that Help to Buy will give an incentive for house builders, but it is a very indirect and inefficient method. It would be better to focus on 'help to build' types of intervention such as liberalizing planning and giving incentives to house builders," he added.
Martin Beck, the EY Item Club's senior economic adviser, took the opposite view, arguing that Help to Buy has been a positive force for the British economy.
"There has been a big jump in new homes under construction and giving the timing of it, it looks like Help to Buy has contributed," he said.
"In areas outside London, where house prices are very weak and still well below 2007 levels, Help to Buy is good for the local economy as it stimulates construction, which can have a ripple effect throughout the whole economy," he added.
Treasury's report showed that the average house price for the combined schemes was 191,295 pounds, or 151,597 pounds for mortgage guarantee and 204,805 pounds under the equity loan scheme - all of which were well below the British average house price of 252,000 pounds.
"As Britons, home ownership is in our blood - it's about aspiration, planning for the future and laying down roots. But we inherited a situation where for many people, buying a home seemed all but impossible - people who worked hard, had good jobs and could afford the monthly mortgage payments, but didn't have the large deposit needed up front. For those without rich parents, the dream of home ownership remained just that: a dream. That is why we brought in Help to Buy," said Prime Minister David Cameron, "Help to Buy has helped thousands of hardworking people to buy a new home and crucially it is helping to increase the number of new homes being built around the country."
The Treasure said that private house building was up 34 percent since the launch of Help to Buy. Mark Carney, the governor of the British central bank said last week that the housing market had "deep, deep structural problems" that there were not sufficient houses built. He warned that the booming housing market was posing the "biggest risk" to financial stability and the long-term recovery.

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