Member Article

Help to Buy scheme needs careful monitoring

Blake Robinson, operations director at 4041, a not for profit company which provides training in construction skills, shares his views on the Help to Buy scheme.

After Wednesday’s rather mixed budget reviews one area stands out in relation to the plan to kick start growth in the housing market - the introduction of the Help to Buy Scheme, scheduled for 2014.

Whilst on the face of it this seems a very well planned scheme to allow those who have been struggling to find deposits of up to 20% of the mortgage required to purchase a home, if not closely monitored, it could also mark the start of price increases in the new homes market as deposits become less of an issue for buyers.

Typically an average rise of 10-20% applied to a £150k property would make only a small impact on the buyer under this new scheme.

The housing market suffered an unprecedented period of growth in the ten years before the recession and we continue to suffer the effects of mortgage lenders approving mortgages for the full market values and more in some cases, with the result that many home owners find themselves in negative equity.

It would be prudent to ensure that lessons have been learned and that a repeat of this is not going to happen through a different source of borrowing. If this scheme is to work then properties need to be sold at a realistic price so that any government funding is utilised as effectively as possible, reaching out to more and more home buyers who actually wish to occupy a home, rather than sell it on for profit.

There was some other news this week that could support this scheme in assisting with keeping house prices at an affordable level so that there can be some real benefit to those hoping to get on the property ladder as well as those wishing to climb it.

It appears that the Local Enterprise Partnerships (LEPs) are to get funding to cover both housing and vocational training in an attempt to encourage growth in core cities outside of London.

This could provide a perfect opportunity for housebuilders to make significant investments in the training and development of young people, those seeking retraining or those returning to work in order to keep the development costs of new builds down to an affordable level. At the same time, this would increase the amount of new build projects driven by new employees in the sector.

There are a number of companies that have set up projects recently which allow young people or those on ‘back to work’ programmes to build houses either for the private market or for the social housing market.

These projects in general do offer a financial saving however, far more importantly they create opportunities for people to develop their employability skills and to find further or future employment.

The LEP’s would be strongly advised to consider working with these forward-thinking companies to ensure that housing schemes could be designed and built which would not only benefit the buyer in relation to the Help to Buy Scheme, but would also provide jobs for those who embark on a career path by building the houses.

Hopefully, we may now see someone coordinating all these schemes into a strategic vehicle that can best serve the people who will benefit significantly from the opportunities they seek to create.

It would be a shame if after what is a strong indication that the Coalition government wants to get things moving, for it to stall due to inflated prices taking the buyers out of the market again.

This was posted in Bdaily's Members' News section by Leigh Chelton .