The government’s £ 29bn purchase aid program has pushed up house prices in England and failed to ‘deliver value for money’ for the taxpayer, according to a report by the House of Lords released Monday.
Instead, the money spent on the program could have helped replenish the declining social housing stock in England, said the report’s authors, who sit on the Lords’ built environment committee.
The ‘program, which will have cost around £ 29 billion in cash by 2023, inflates prices more than its grant value in areas where it is needed most. . . This funding would be better spent to increase the supply of housing, ”according to the report.
The Home Buyer’s Assistance was designed to stimulate homeownership by providing a home equity loan to buyers. However, it has been criticized as a developer grant that does little to address the lack of truly affordable housing.
The social housing stock has fallen by nearly 500,000 homes since 2000, according to an analysis of official statistics from the Shelter charity.
“Help to Buy has had its virtues, especially outside of London. But in London and in those hotspots of demand, this has directly impacted the price. That’s the problem, ”said Baroness Neville-Rolfe, chair of the committee.
Nearly 340,000 homes have been purchased thanks to the participatory loan since the launch of the Purchase Assistance in 2013, the vast majority by first-time buyers. During the same period, the stock prices of major builders, including Persimmon, Barratt Homes and Taylor Wimpey, nearly tripled.
The developers are defending the project, claiming that it has helped increase the number of houses being built and broaden access to them. “Since its inception in 2013, Help to Buy has been the primary contributor to doubling the housing supply,” said David O’Leary, director of policy for the Home Builders Federation, an industry organization.
The program was now paying dividends to the Treasury, he added, “with a return of about 10% on the 70,000 equity loans already fully repaid by owners.”
The Lords Committee has put forward a number of proposals to address the nation’s housing shortage, calling on the government to reform the planning system, support small builders, and redirect funds to new social housing and worker training. building.
The government released a white paper in August 2020 outlining ambitious plans to simplify the Byzantine and often sclerotic planning system. This would have been a boon for small to mid-sized developers, who struggle to navigate the long and expensive planning process.
SME builders account for just 10% of new homes built in England today, up from 39% in the late 1980s, according to the report, which says increasing their numbers is important to tackle the shortage.
But the plans were put on hold by Michael Gove, who replaced Robert Jenrick as housing secretary last year. It is expected to introduce a watered-down version of the reforms as part of a larger upgrade plan later this year.
“Uncertainty about the future planning system and delays in planning reforms have had a ‘chilling effect’ on housing construction and created uncertainty for home builders and planners,” the report said, which draws on evidence from housing industry groups, charities, think tanks and academics. .