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The Help to Buy Con Helps No-One

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January 1st 2014 brought a couple of pivotal moments; the end of transitional movement controls for citizens of Bulgaria and Romania and the beginning in earnest of the government's deposit guarantee scheme. One has the potential to harm a country which, whether you believe it or not, seems to be on the brink of some kind of recovery. The other is immigration.

As a 29-year old who is soon to be married the hopes and dreams of owning our own property has for years been a wild pipe dream, looking on at friends with rich parents who can afford to stump up a 25% deposit with a mix of anger and bitterness. With rents continually increasing, the cost of living soaring to astronomical heights and interest rates so low saving money is about as useful as hoarding it in a cupboard, something needed to be done.

The government's new Help to Buy scheme, whereby they will effectively guarantee 15% of the deposit for any kind of home, not just new-builds is, on face value at least, a massive help to the thousands of people all over the UK who dream of the prospect of owning their home.

However, peel back the layers of government publicity where David Cameron stands uncomfortably in a 'normal person's' house, and it is hard not to think cynically. With reports now coming through of a far from legitimate 'new homeowner' to pick for publicity shots being draped around Twitter like some gleaming trophy, this scheme has got nothing but an unscrupulous con written all over it.

Without a fundamental decrease in the cost of living even a 5% deposit will be out of the reach of most people without wealthy parents. Take into account an average 20% rise in rental prices combined with an average 50% rise in fuel prices since November 2010 alone and the ability to save for a deposit continues to be out of reach except for the wealthiest few. Combine this crisis with wages that, in real terms at least, are at best stagnating and at worst undercut, it makes well-publicised schemes such as this smack of hypocrisy.

In effect, absolutely nothing changes. A large deposit is still required, especially in the South-East and London where average house prices mean that everyone apart from the wealthiest 5% are able to afford to buy. Even if the scheme guaranteed 18% of the deposit value, how is it possible to save thousands in an economic climate that, due to consistently poor interest rates, ensures saving is almost worthless?

It is though the very basis of the scheme that stinks of political electioneering. In one swoop the government placate the electorate with a set of incentives that gets everyone feeling good. For the mostly young, first time buyers the scheme offers the chance to finally own our own bricks and mortar in an age when home ownership has become as easy as an England Ashes victory. For the Middle England voters, they get what they voted for; rapidly rising house prices. It is the most short-term of short-term answers, a no-lose situation for a government who are looking no further than the next set of election results.

What will happen then? Well, obviously I'm no economist but with a sudden influx of extra first time buyers there is a huge and potentially catastrophic risk that the next big depressional housing bubble will form just over the metaphorical Atlantic. And just as the last few weeks have seen truly disturbing weather patterns become almost stationary over the UK, so could the next crisis if the housing bubble grows so large that it bursts. What will happen to the millions of future young buyers who are looking to get in in life when they are no longer able to afford property that was too expensive even for the current generation? With house prices increasing on average 8.4% across the UK in 2013 Vince Cable is absolutely spot on when he says we are heading towards another housing bubble crisis.

Myself and my fiance are saving for a home and would benefit in principal from the Help to Buy scheme, but at what cost? This devious and frankly hypocritical move by the government has the hallmarks of a plan thought about over a late bottle of Bollinger in some expensive West End restaurant. A plan that if left unchecked will result in one of the worst house price bubbles this country has ever seen. Meaning the dreams of millions of young people will once again be out of reach except for the wealthiest, luckiest few.

Around the Web

Help to Buy: home ownership schemes - GOV.UK

U.K. Help-to-Buy Mortgage Bids Approach 1 Billion Pounds ...

Help to Buy - Home ownership schemes backed by HM Government ...

Help to Buy scheme | Money | The Guardian

Help to Buy: Demand fuels fears of house-price bubble | News | The ...

UK Help-to-Buy Mortgage Bids Approach 1 Billion Pounds

U.K. Help-to-Buy Mortgage Applications Reach £1 Billion

Cable Urges Help to Buy Review Amid 'Raging Housing Boom'

UK House Prices Jump 8.4% Across 2013 as Help to Buy Takes Hold

Is the Help to Buy effect a tonic, or toxic?