Wednesday, 15 April 2020

Don't worry lads! The government has finally worked out how to fix the economic crisis caused by their overreaction to the covid-19 scare...


The Government is in talks with The Home Builders Federation, whose members deliver around 80% of new homes built each year, about extending the scheme to help support the industry after Covid-19 lockdown measures are lifted, according to The Times.

Sorry, what was that first bit... "The Government is in talks with The Home Builders Federation..."? I'm sure the HBF will politely explain the economics of the housing/land market and explain that land prices will always rise to soak up the subsidy and that there are far better ways of spending taxpayers' money.

The shutdown of construction work and sales offices is expected to have a long-term impact on the sector, with Savills estimating that the lockdown will hinder the construction of around 200,000 new homes.

Wot? They are building on average 200,000 homes per year; do they expect the lock down to last a year? (For all of our sakes, I hope it doesn't).

Since the launch of the Help to Buy: Equity Loan scheme in April 2013, 248,075 properties have been bought, with first-time buyers accounting for 81% of total purchases.

That proves nothing. It's an arms race. If other people can bid more because they've tapped into the subsidy, then you have no choice except to tap into the subsidy and bid a bit more as well.

The current Help to Buy scheme is due to end in April 2021. A new scheme will then run for two years, restricted to first-time buyers with regional property price caps.

But finally they've found an excuse to extend it. Phew, I was getting worried there.


mombers said...

I did an FOI request on how many Help To Sell loans were impaired by the doubling ground rent trap but they said they didn't have that info - astonishing. Maybe I'll try another to get the full picture of the loan portfolio. I'm guessing it was looking quite smelly even before COVID19. Flammable cladding has written a few loans down to zero I think.

Mark Wadsworth said...

M, good effort, it is outrageous if they don't have this info.

L fairfax said...

I think that there will always be an excuse to extend it. I hope to be proved wrong, but doubt it.
Either way I am happy - happy be proved right, happy this stops, if I am wrong!

Mark Wadsworth said...

LF: "I think that there will always be an excuse to extend it."

That is my working assumption.

If demand falls, then they will extend it to ensure that new homes get built (the justification used by Labour for the previous schemes it brought in in 2009 or 2010).

If demand increases, they will extend it 'to help first time buyers onto the ladder'.

mombers said...

In the US, they slipped on their own turds in 2008 with Freddie Mac and Fannie Mae (similar demand side boosting gvmt interventions). Have they abolished the programs? Hell no! What will it take to stop throwing good money after bad?

Mark Wadsworth said...

M, they will never stop of their own accord.