Why we must levy a windfall tax on house builders
Along with many financial experts we are of the opinion that George Osborne’s “Help To Buy” scheme will fuel a house price bubble – in fact it already is!
It is nothing short of a subsidy for house builders who continue to make record profits, most of whom report profits up 50% or more last year even before help to buy kicked in. Help To Buy has enabled house builders to avoid reducing prices and provide lenders with less risk on loans.
The treasury estimates that the £3.5billion scheme will help up to 74,000 new home buyers. I am of the opinion that the house builders are the main beneficiaries.
Those buying a new home will be buying just 80%, paying ever-increasing prices. The house builder’s shares are at record levels as the Help To Buy bonanza is enabling them to pig out on naive buyers who cannot really afford to own a home. Described by Albert Edwards of Societe Generale as “the indentured servitude of our young people”
The government must therefore levy a windfall tax on all house builders making in excess of a 10% profit whilst the scheme is in operation, to prevent house builders cashing in on the extra demand and raising their prices as financing a new home becomes easier.
When interest rates eventually do rise and there is a corresponding house price crash, it will be the taxpayer, left without a chair when the music stops!
Quite frankly, Help To Buy is nothing short of a political measure to give the illusion of prosperity in time for the 2015 election. Provided the bubble doesn’t burst before the next election, the government doesn’t care!
