Member Article

Help to Buy is helping, not hurting, North East housing

4% of Help to Buy homes in the North East, almost the same proportion as London

A property expert believes official figures published today prove the government’s Help to Buy scheme has helped housing in the North East – and had limited impact on London’s property bubble.

Constant calls for Chancellor George Osborne to curb his housing stimulus scheme are described by Ajay Jagota of leading local property firm KIS as “a new national pastime” amid signs that the Bank of England is preparing to water down the policy’s impact.

Taxpayer-backed lender Lloyds has already announced plans to restrict “risky” mortgages of more than £500,000 in a move seen as designed to cool the London property market, while Deputy Prime Minister Nick Clegg last week suggested Help to Buy should be “pared back”.

The Bank of England Financial Policy Committee is rumoured to be considering recommending measures weakening the impact of Help to Buy, including higher capital requirements for banks to be held against mortgage lending levels and limits on the maximum loan to value ratio for mortgages.

Research from Morgan Stanley, however, suggests the scheme has provided significant stimulus house building, which has risen by 31% in 12 months. 30% of all new build homes in the UK are now being funded by Help to Buy.

Official figures released today revealed that 4% of Help to Buy sales occurred in the North East, almost the same proportion as London (5%). Nationally 7313 homes have been sold so far under the mortgage guarantee scheme, 80% to first time buyers.

308 properties have been sold using the scheme in the North East, 82% to first time buyers.

Ajay Jagota of North East property firm KIS, who manage properties for over 700 landlords from branches in Sunderland, South Shields, North Shields and Welwyn Garden City believes criticism of Help to Buy is wide of the mark.

The firm was named Letting Agent of the Year at the national Landlord and Letting Awards and has recently expanded into residential sales.

Ajay said: “Criticising Help to Buy has become a new national pastime, and one where the facts rarely seem to substantiate the rhetoric.

“The big problem in UK housing is a simple lack of homes, and the evidence suggests that Help to Buy is helping, not hurting, that situation by providing a vital stimulus to house building.

“The facts seem to show that little more than a hundred new mortgages in London attributable to Help to Buy and in a city of 8,000,000 it seems unlikely to me that that would fuel a property bubble as much as a flood foreign investment from international cash buyers.

“Even if I am mistaken in that belief, the government would be utterly misguided to fail an entire policy on the basis of its impact on one area when the evidence suggests it is helping everywhere else.

“Help to Buy is helping house building, which the North East and the UK badly needs more of. In my view it remains much more sensible to leave it alone and instead focus on the Financial Conduct Authority’s Mortgage Market Review, making banks more responsible for proving the affordability of mortgages, ensuring than only those who can afford them are accepted for them.”

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