‘Help to Buy’ more like ‘help to profit’ as house builders clean up, taking full advantage of the taxpayer-funded scheme subsidising new home buyers. According to Markit, a provider of financial information services, it expects dividends from seven of the main UK listed housebuilders to rise by 90 per cent this year with payouts totalling £285m, thanks to the Help To Buy scheme which now accounts for 20% of housebuilder’s sales.
A Markitt spokesperson told the Financial Times:
“The outlook for UK homebuilders has improved since the beginning of the year with companies reporting an increasingly buoyant trading environment, supported by the Help to Buy scheme,” “This has driven improved profitability and higher margins. The resulting positive cash-flows are flowing into improved returns to shareholders as companies outline plans to resume or increase payouts.”
The housing bubble has already been created, as prices for new homes rose on average 7% in the last 12 months, twice that of older homes. Mortgage approvals are also up with the Bank of England figures released 30 August 2013, showing mortgage approvals in July, had risen to their highest level since the financial crisis in March 2008. Recent figures released by Nationwide stated that house prieces rose 3.5% in the year to August.
Sooner or later every bubble will meet its pin! Until then, house builder and their shareholders should not be allowed to profit at the taxpayer’s expense. A windfall tax must be levied on excessive builder profit from ‘Help to Buy’ scheme. George Osborne should include this in his Autumn budget statement.