economonkey

With all the coverage of the temporary suspension of stamp duty (and if you’re currently marketing your house at £200k, get ready for offers below £175k), another jewel in the disjointed mish-mash of government announcements has been ignored by many commentators.

The Beeb caught it, though: “Other measures aimed at boosting the housing market include “free” loans of up to 30% for first time buyers in England. Households earning less than £60,000 will be offered loans free of charge for five years on new properties, co-funded by the state and developers. The loans system, called HomeBuy Direct, is to be run together with “large-scale” property firms.”

So people wanting to buy a house from these ‘large-scale property firms’ (hint: BDEV and TW are up significantly today) get 30% off… for a few years. Then they must pay… something, which hasn’t yet been announced. Probably the 30% plus interest at RPI.

As is always the case with schemes like this, one must ask where the money is going. The answer is pretty obvious: straight into the developers’ pockets. This and other ’shared ownership’ schemes are designed to avoid developers having to lower the headline price of the properties they are selling. It’s state aid for the construction industry, basically.

We’re not commenting on whether or not that’s a good thing in general terms, but it’s important to bear in mind where your taxes are going. This is not a scheme to help ‘decent, hard-working people’ and first-time buyers. It’s a scheme to prevent house-builders going bust.