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This government is solving Britain’s homes crisis

29 May 2014

An Englishman’s home is his castle. And today, record numbers of people are living that adage thanks to Help to Buy; a scheme that is reviving house-building after decades of inaction.

Statistics released today show more than 27,000 homes have been bought through Help to Buy. This is great news. For too long, hardworking people in this country have been priced out of the housing market: for the simple reason that demand was outstripping supply and because prospective buyers who could afford a mortgage were not able to stump up the huge deposits banks were demanding.

Politicians on all sides recognise this problem; but it is this Conservative-led government which is taking action. With the average house price in UK now at £252,000, we recognise that a £50k deposit for someone on an average salary of £26,500 is a tall order. An injection of capital is needed at both ends, to let people buy homes and boost the housing supply.

Help to Buy, which supports people buying a home with a small deposit (the type that became very hard to access in the wake of Labour’s financial crash) offers that two-pronged solution. The Equity Loan, introduced in April 2013, gives buyers of new build properties a government loan of 20 per cent of the sale price; while the mortgage guarantee, launched five months ago, allows buyers to access mortgages with a loan worth up to 95 per cent of the sale price, by giving high-street lenders a government guarantee against losses on those mortgages.

Of course, we remain vigilant about risks to the housing market – we don’t want to repeat Labour’s mistakes. Before the financial crisis, under Labour, people were being allowed to borrow 120 per cent of the value of the house they were purchasing – with minimal checks. That is why this government created the Financial Policy Committee at the Bank of England, which has the tools to intervene in the housing market to ensure economic stability.

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This is not just about helping people; this is about helping business. Help to Buy is getting Britain building again through responsible lending. Every loan under the Equity Loan scheme means a new build home is built, and of the 1,200 builders registered with the scheme, over 90 per cent are small or medium enterprises. Stewart Baseley, the executive chairman of the Home Builders Federation, says: “Help to Buy has reinvigorated the home building industry, contributed to a sharp increase in new housing starts and allowed thousands of first-time buyers onto the housing ladder.”

It’s no coincidence that house-building is now at its highest level since 2007; that more jobs have been created as a result; and that hardworking families right across the country are fulfilling their dreams of buying a home, which allows them to plan for the future with security and certainty. The main beneficiaries of Help to Buy are those who are starting out in life. The average sales price under the Equity Loan scheme stands at £204,805 and for the Mortgage Guarantee is £151,957. And eight out of ten sales are to first-time buyers.

Since Help to Buy was launched in April 2013, private house-building has risen by 34 per cent. Research conducted by Morgan Stanley suggests about 30 per cent of all new builds in England are being funded by Help to Buy – and that by 2016 it could be responsible for up to a 55 per cent increase in English housing statistics compared with 2012 levels. In the long term, we need to accelerate the number of homes we build to make sure that even more families can afford to get on the housing ladder.

But listen to the cries of indignation from Labour today. When they will repeat (without a hint of irony) that rising demand for housing must be matched by rising supply – and yet again we will hear Labour’s pledge to build 200,000 homes annually by 2020.

Oh, how Labour loves to bash us on housing! But it’s pure political posturing. They didn’t get it right in 13 years, despite 9 different housing ministers promising the world. They set an annual target of 200,000 homes which Gordon Brown (advised by Ed Miliband at the time) accelerated to 240,000. The reality? Under Labour, house-building fell to levels not seen since the 1920s, meaning people who were doing the right thing couldn’t afford the deposit they needed to buy their own home. Even today in Labour-run Wales, red tape adds up to £13,000 to the cost of building a home, which has contributed to a 12 per cent fall in new home registrations last year.

Overall, housing starts are now 113 per cent higher than in 2009, the trough of Labour’s housing crash. In addition, the National House Building Council reported housing registrations rose by 30 per cent in England in 2013, and in London by 60 per cent to the highest annual total since their records began 26 years ago.

Help to Buy is just one of several interventions we’ve put in place to support the housing market. Others include the delivery of 170,000 affordable homes since 2010; building twice as many council houses in four years Labour did in 13; and investing more than half a billion pounds to support SME builders.

The recovery we are seeing in the English housing market is part of this government’s wider economic recovery. It’s going from strength to strength and its foundations are solid. Our Labour opponents, who have no long-term economic plan and who presided over a disastrous housing crash, should be careful not to throw stones. We’re building British homes in bricks and mortar.

Kris Hopkins is Housing Minister and Conservative MP for Keighley and Ilkley

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  • evad666

    House builder are supporting the government by building personal spaces for families to be warm and dry. Spaces which appear to be modeled on tenement blocks and are barely adequate as potential homes.
    As to the housing crisis the real cause is stuffing the population into these islands.

  • itdoesntaddup

    We have 27.4 million homes. Adding 0.13 million is less than half a percent of the housing stock, which impacts average occupancy (currently about 2.31) by 0.01 persons per household. The problem in housing is not a shortage of homes – it is ludicrous prices. Encouraging the young to take on lifestyle-changing levels of debt that will impair their ability to save for a pension – or leaving taxpayers to pick up the tab when they can’t afford the mortgage as interest rates rise is frankly criminal. You’re as barking as Kate Barker if you think that prices at ten times incomes are economically sane.

    The fact is that BTL buys up 220,000 homes a year on the back of Housing Landlord benefit propping up prices and generous access to mortgage funding based on pyramid buying – reducing the pool of houses available for owner occupiers. They daren’t sell, because the CGT take would devastate their finances compared with hanging on.

    Before you talk about red tape adding to the costs of building – what have you done to unwind Sec 106 charges, the absurd costs of “zero carbon” building standards or fines if not met and consequent undesirability of the homes, the overhead from requiring a five year supply of building land that results in hoarding? Newbuilds remain extraordinarily poor value for money.

  • ButcombeMan

    This is too self congratulatory, I suggest Mr Hopkins takes a trip to Slough and looks at the multi occupied garages and illegal sheds.

    The housing crisis just cannot be solved with 200,000 plus immigrants a year.

  • kyalami

    Yes, Kris, they are solving the housing problem by building all over green fields in the countryside. Very seldom, though, in the fields adjacent to where MPs have their rural home.

    The country is being ruined by building excess and the Conservatives are entirely to blame.

  • andagain

    It’s no coincidence that house-building is now at its highest level since 2007

    Meaning that it has not yet risen to its pre-crash level, which was already low by historic standards.

  • 15peter20

    “Of course, we remain vigilant about risks to the housing market – we don’t want to repeat Labour’s mistakes.”

    Like runaway house-price inflation? Yes, you have certainly dodged that bullet.

    • itdoesntaddup

      Indeed: the Nationwide UK wide index has been accelerating very sharply since the main tranche of HTB 95% mortgage came in this year, reaching a mind blowing annualised rate of 24% in April.

  • dado_trunking

    Statistics also show that we have seen 7,000 odd completions under Help2Buy since Oct 8. That is an irrelevantly low number, given all this talk about it. What matters here is that this talk obscures the fact that the Duke of Westminster’s property portfolio ALONE has risen by £700,000,000 in the same period (!)

    The simple maths clarify again:
    1 unelected English aristocrat = 100,000 English plebs

    • the viceroy’s gin

      …how many of your sockpuppets is it worth, lad?

  • Alex

    I only got as far as the second paragraph. Anyone who thinks that you solve a crisis caused by a lack of supply by subsidising buyers is not worth reading. Or indeed voting for.

    • itdoesntaddup

      The crisis is caused by absurd levels of mortgage lending that have driven up prices. It is the banks who are being subsidised to prevent the true value of their mortgage books from being revealed until the next banking crash.

  • Blindsideflanker

    Best Mr Hopkins keeps this load of tripe for his sycophantic Parliamentary helpers who are paid to say, ‘yes sir , no sir,aren’t you wonderful sir’.

    It is no surprise to anyone that the Government manipulates the property market to make people feel richer in front of an election. Post the election will be a different matter, when they will need to suck the QE out of the money markets, and austerity part two will really bite.

    Oh by the way Mr Hopkins , no Government can claim to be solving the housing crisis when they are failing to solve the immigration crisis.

    • an ex-tory voter

      The housing problem is caused by a shortage of new builds. That shortage is is created by the Government’s own planning laws which prevent anyone other than “corporate mega builders” from building anything. The corporates themselve are only interested in building “mega estates” which are in turn creating vast dormitory areas. These are being foisted upon existing towns without any investment in infrastructure, or support services, particularly schools and the whole thing is being done against the wishes of the “local electorate”. Government planning policy is at the root of all this distress, both for people wanting homes and for those being forced to accept enormous new estates on their doorstep.
      As for “help to buy”, it is a subsidy which can only serve to drive prices higher. The minister and his government are “chasing the end of a rainbow”, and they are doing so for simple political gain ahead of a General Election. As usual, it is the poor taxpayer who will be financing that quest for political advantage.

      • andagain

        The corporates themselve are only interested in building “mega estates” which are in turn creating vast dormitory areas.

        Who can blame them,when that’s the only thing they can drive through the planning system?

        • an ex-tory voter


      • itdoesntaddup

        There is NO housing shortage. Homelessness is half what it was under Labour in 2005. Average occupancy rates have stayed almost the same since 2001 (they were falling before that) and are the lowest they have ever been. We have an allocation problem, caused by the property bubble, which is reinforced by HTB, rent support for BTL and the CGT ratchet that prevents landlords selling and in London, huge gobbets of foreign money.

  • monty61

    What utter rot. Does the Speccy get paid by the word for this rubbish?

  • Colonel Mustard

    And while you are at it you might consider the discrimination regarding the offer of mortgages to the self-employed (a growing proportion of the population). Many of them pay exorbitant rents but are refused mortgages which would require monthly repayments lower than those rents.

    • HookesLaw

      What discrimination? Self certified mortgages were abused before the crash and are no more… perhaps as well. What a lender needs is to establish true income. I can see why lenders might not like to take on the risk of borrowers with an uncertain income, but if in fact someone cannot show a true and sustainable income then perhaps they are being unwise to seek a mortgage.

      • Colonel Mustard

        No, it’s not just about certifiable income. They are treated quite differently with different presumptions up front, including sometimes the demand for a larger deposit.

        • HookesLaw

          All of which revolves around the issue of risk. In the not so recent past self certifying was something of a scam.

          • Colonel Mustard

            It’s an artificial perception of risk that translates into a form of discrimination. Why should self-employed people be considered less trustworthy than salaried employees? In fact since banks can re-possess on an unpaid mortgage anyway I don’t see why the question of risk should even arise. People aren’t going to run away and disappear with the house they’ve bought.

            We have heard a lot about tightening up mortgage provision which has made it much harder for some people to get them but we haven’t seen much evidence of tightening up the risk from crooked or reckless bankers.

      • telemachus

        I know from my own family that there is inbuilt discrimination against self employed by many lenders
        Negotiating the minefield requires fancy fees to fancy brokers and bogger help from the bankofmumanddad
        This is evidence of duplicitous action by the Coalition
        Yvette’s Wolverhampton girl Emma Reynolds has vowed not only to Reward enterprise by equal treatment of employed and self employed but also to make it easier for both groups with lower incomes to get into housing by building more

  • dado_trunking

    UKIP pensioners, fear not. Your 50 year old children will not move back in.

    40 year old parents, wake up. Your kids will never move out!

    20 year old voters. No one cares about you, and rightly so.

    • the viceroy’s gin

      …what about all your infantile sockpuppets, lad?

  • dado_trunking

    There is no ‘homes’ crisis. There clearly is an affordability crisis.
    Briatin’s way of dealing with that will be to return to Victorian-style occupancy rates per dwelling.

    • Sapporo

      You mean all those political/media/luvvie types will sub-divide their London townhouses? The very houses that were occupied by 2 or 3 working-class families before the socialist planners cleansed the prols to the estates and new towns, allowing the middle-class liberals to buy them up and convert them to single dwellings.

  • Colonel Mustard

    So, if I have the £50,000 deposit that still leaves £200k to be mortgaged at 4 x salary which will leave £100k short. That should demonstrate why average house prices and average salaries are bonkers. And yet you people are in charge of the economy?

    “An Englishman’s home is his castle.”

    No it isn’t. Nowadays any New Labour Eurocop can get a faceless Eurobureaucrat to sign off on unnecessary use of force and criminal damage so that a posse of black balaclava wearing thugs can smash the “castle” door in at dawn and have the whole thing filmed for TV propaganda. This remarkable change in policing by consent was never, as far as I can tell, debated in parliament or sanctioned properly in law. Even the Gestapo had to knock first. They, like the police here once, could only use force if entry was refused.

    • HookesLaw

      Usual dreary rubbish. Eurorubbish even.
      Many homes cost less than average. The average… average… house price in Newcastle would seem to be 169k, in Birmingham 180k.
      People cannot bemoan the alleged impossibility to buy and at the same time say there is a housing bubble and it is fuelled by 27,000 mortgages spread over about 2 years.

      • Colonel Mustard

        Er, it wasn’t my example. It was Mr Hopkins who used an average house price vs an average income in his article in a way that didn’t add up.

        • HookesLaw

          So we are agreed!?
          Well not on the thugs breaking doors… that is a relief.
          Help to buy is a help for people who are having problems with the deposit, but its size is not contributing to any bubble. 7000 in 6 months.

          • itdoesntaddup

            So the claim that it’s 27,000 is bunkum, like most of the article.

          • Colonel Mustard

            So you like living in a country where posses of masked police smash down doors at dawn?

  • Tony_E

    Labour are useless on housing – we get that. But while demand is fed by massive population increase you’re never going to get to a sensible housing market, no matter how much help you provide. You’ll always be running to stand still.

    Also, when your local councils are allocating housing to those in need of it, their calculations of what constitutes need nearly always disadvantages those who are trying to do the right things over those who have done little to help themselves or have had no time here to contribute to the general good. It’s little wonder that trust is falling in the old parties, because whatever they say, the problems remain and their proposed solutions don’t substantially change anything.

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