Help to Buy 'more likely to increase prices than homes'
By Richard Johnstone | 3 May 2013
The Chartered Institute of Housing has warned that the government’s £130bn Help to Buy scheme could increase housing costs without leading to more homes being built.
A CIH report, published today, said the cost of buying a home had increased by more than 70% in the past decade, while the cost of renting had risen by almost 30% in the same period.
Help to Buy, which was announced in the Budget in March, could lead to even higher prices, according to the report, Uncovering the true cost of housing.
Under the scheme, families who want to buy a home should be able to access a mortgage to buy it without a large deposit as the Treasury will guarantee the loan.
However, the CIH said this could lead to a hike in costs. The report found that the first year of home ownership cost on average £70,538 in 2012 – taking into account a 25% deposit, stamp duty, mortgage repayments and annual maintenance. This is up 73% from £40,892 in 2002.
Over the same period, the cost of renting a home for 12 months – including a six-week deposit and monthly payments – rose by 29%, from £7,492 to £9,662.
The report highlighted the Treasury select committee's warning last month about Help to Buy’s ‘unintended consequences’. The MPs concluded that the scheme’s ‘primary outcome may be to support house prices’, and that it may not support first time buyers, despite this being the group the government wanted to help.
CIH chief executive Grainia Long said these concerns were echoed in today’s report. ‘Living in an affordable, decent quality home – whether that's through owning or renting – is becoming a pipe dream for an increasing number of people. These figures show just how dysfunctional our housing market has become. We share the concerns expressed by MPs last week that the government's new Help to Buy scheme risks increasing house prices while doing little to boost the number of homes actually being built.
'What we need to see from the government is direct investment in building new houses, which would help make things more affordable for everyone.’