Speaking yesterday on the BBC’s Andrew Marr show, May said the government would make a further £10bn available to enable the Help to Buy Scheme to get another 135,000 people onto the property ladder. The prime minister said details for the plan would be given in the Budget, on 22 November.
The Help to Buy scheme has encouraged more new homes to be built, but rates still remain well down on historic highs and are far below the numbers needed to meet demand.
Since the last set of results were published it has also emerged that builders are adding a Help to Buy premium to developments and according to estate agent research the higher value loans available in London are distorting the market.
However, housebuilders have been urging the government to extend the scheme to enable them to make plans for developments beginning in 2021.
Extending the scheme has drawn criticism from a number of areas.
Sam Bowman, executive director of the Adam Smith Institute, said: “Reviving Help to Buy is like throwing petrol onto a bonfire. The property market is totally dysfunctional because supply is so tightly constrained by planning rules, and adding more demand without improving the supply of houses is just going to raise house prices and make homes more unaffordable for people who don’t qualify for the Help to Buy subsidy.”
He added: “Only 2% of England is built on, but we’re fenced in by NIMBYs (not in my backyard) and planning laws that block development nearly anywhere.
“To improve the housing market you need to change the rules of the game, so that damaged parts of the green belt can be built on, so we can have more dense and efficient development of existing urban areas, and so that locals benefit from new developments near them. Reviving Help to Buy is an astonishingly ill-judged move that may prove economically and politically disastrous for the government.”
The Adam Smith Institute was not alone in criticising the move. Polly Neate, CEO of Shelter said: “Extending Help to Buy is the wrong priority at a time when over a million renters are struggling with crippling housing costs. Help to Buy has barely helped the first-time buyers it is targeted at and has done nothing to help those worst affected by our broken housing market and those at risk of homelessness. Moreover, it has increased house prices and propped up a speculative development model in need of reform.”