“Dream of owning your own home but need a little help?” Not content with creating another housing bubble – Nationwide report house prices have risen 8.8% since January 2013 – HM government is now advertising its Help To Buy scheme on the television with a taxpayer-funded 30 second commercial. You can see it here!
Why? Surely people who cannot afford to buy their own home, should not be persuaded to buy by the government? It’s a bit like payday lending for home buyers. They know they cannot afford it but hey, the government is making it easy, so why not?
The advertisement says the scheme is for “People who can afford a mortgage, but not a big deposit” So it’s for people who cannot afford to save 5% – 10% of the purchase price – the very same people who will struggle to meet the monthly repayments when interest rates eventually go up. To buy the average UK home costing £176,500 a buyer(s) would need to be earning at least £42,000 based on a mortgage of four times earnings. Surely someone earning over £40,000 a year (£31,300 a year – £2,610 a month after tax and NI) should be able to save a sizeable deposit in a few years? After all, it is just a question of priorities.
The government has already created a fiscal time bomb for the nation, if borrowers using Help to Buy default on their loans which the government has underwritten to protect lenders. In addition if, or rather when house prices fall, as they always do when interest rates rise, the taxpayer will get back less than the amount the government loaned for those buying using the 5-year interest-free, equity share Help to Buy scheme for new build homes. (aka the house builder’s subsidy) It’s not that good for new home buyers either, as they only own 80% of the new home and will be charged a fee after five years of 1.75% rising at RPI inflation plus 1% every year thereafter. If this wasn’t bad enough, house builders have now jacked up their house prices, all but wiping out the taxpayer’s 20% equity contribution.
So you have to wonder what is the point of advertising Help To Buy on TV, encouraging even more people to take advantage of it? It has no benefit to the country, only liabilities. Those that are looking to buy a home or move will (or should) already be aware of this ludicrous scheme anyway. Even if they have been living in a cave for the last 10 months, you can be sure that estate agents and house builders will be quick to tell them about it to get the sale!
Perhaps it is aimed at people sitting down watching TV seeing the ad and saying, “you know what Tracey, I hadn’t even considered buying a home but after seeing that I am going to look into it.”
Come on Mr Cameron, you don’t need to advertise Help to Buy on television! This is just wasting even more taxpayer’s money. Or is it the more homeowners, the more likely Cameron believes he is to win next year’s election?