Member Article

Budget 2014: Help to Buy needs more Help to Build to stay a success story

A leading North East letting agent has welcomed plans to extend the Help to Buy scheme to 2020 announced in the budget – but warned the plan needs to be supported with new house building in all parts of the country if it is to stay “a success story”.

George Osborne this week announced the equity loan scheme part of Help to Buy will be extended for four further years – having been originally been planned to end in 2016.

Announced in last year’s budget, Help to Buy allows people to buy new homes with deposits of just 5% and mortgages of 75% of the property’s value, with the government making up the difference with a loan of up to 20%.

The Chancellor also announced some government support for new homes in London and the South East– but none in other parts of the country.

Ajay Jagota of North East property business KIS Lettings welcomed the announcements, but warned government will need to do more to build new homes if Help to Buy’s impact is to be sustained.

The firm manages properties for 700 landlords from branches in South Shields, Sunderland, North Shields and Welwyn Garden City and was named Letting Agent of the Year in the 2013 Landlord and Letting Awards.

Ajay said: “Help to Buy was the success story of the last budget, and there’s no question that it was the main reason behind the North East property market finally emerging from the doldrums in recent months.

“Extending it to 2020 is to be welcomed, but if the positive impact it has had so far is to be sustained there is no question the government needs to make an extra effort to build more homes – perhaps through a ‘Help to Build’ scheme supported by government guarantees in a similar way to Help to Buy.

“As much of a fan of Help to Buy as I am, the risk remains that if demand for housing continues to outstrip supply, house prices could rise beyond the reach of most people, making the situation worse, not better.

“The only thing we’ve heard from the Chancellor on house building this week was a recycled announcement of a so-called ‘garden city’ in Ebbsfleet which is actually 5000 homes smaller than it was when it was first announced in 2012, and some other small scale projects in London and the South East – not exactly a budget for all the regions.

“At a time when we’re only building half the houses we need to in order to meet the rising demand, and coming after a year where the number of new houses being completed actually fell by 5%, this struck me as something of a missed opportunity, not least seems to me to be a higher priority than tax cuts for bingo halls and new pound coins”.

This was posted in Bdaily's Members' News section by Ajay Jagota .