Its latest scheme, Help to Buy, which was announced in the last budget, seems to have captured the public imagination but also maybe highlighted a political agenda.
The Help to Buy scheme comes in two parts. Part one is already up and running and provides equity loans for up to 20% of new build properties. This already appears to be a public success – with over 7,000 properties reserved under the new scheme within the first three months of its launch, according to the Department for Communities and Local Government.
It is the second part of the scheme that appears to have become a political target. From January 2014 it is proposed that the scheme be extended to include all homes and not just new build properties.
There are fears that this may be a step too far and create artificial house price inflation. Only last week on the BBC’s Andrew Marr Show, Vince Cable, the Business Secretary, voiced his concern: “I am worried of the danger of getting into another housing bubble.”
Is this a true concern or just a typical point scoring exercise by a political party? I believe it may well be both. The interesting point is that the view is being expressed by a current member of the coalition government and not by the opposition party.
So, what are the facts and where is the real story? It will be the first time that the current government has targeted non new build properties with one of its schemes.
Is this a political move or a genuine attempt to kick-start the housing market? As always, it is probably a bit of both. There have been plenty of people who have pushed for a scheme that was not just available to new build properties to help the second-time buyers move up the housing ladder.
This is important because if there are no second-time buyers, then the only avenue for first-time buyers is a new build property. This surely limits choice?
The second concern is that this will create a new housing bubble. It is true that this is something that we need to avoid but I feel that the scheme should not encourage this. There has been a pent up demand from people to move home and this may well be the stimulus required.
Traditionally, more properties on the market can help slow house price inflation as there is competition for each purchaser. Also, the scheme has a cap on how much the government is looking to spend – which will limit exposure and should control any potential bubble.
What cannot be argued is the link between government announcements and perceived political bartering. We will never be able to delink the two, but the key is that the policies are sound and have a positive impact on the housing market.