Help to Buy is a disaster for all young people – especially the poor
Now we know what most of us had suspected: the majority of people who have bought a home thanks to the government's Help to Buy scheme were already among the most privileged
Earlier this year I moved into a new flat and, as is typical, then found myself talking about it in seemingly every conversation I had. Bafflingly, the overwhelming assumption when I moved was that I was going to buy a property.
Bearing in mind that at the time I was a 28-year-old self-employed writer, my response was to stare bewildered and then engage in the same conversation over and over again: no, my parents could not give me the money for a deposit (they don’t even own their own homes), and no, Help To Buy would not apply to me – and nor was I interested in partaking.
Today's revelations about the government-funded scheme reminded me exactly why.
According to the UK House Price Index, the average cost of buying a property in London is £485,830. Homes & Property magazine says this will buy you “a small one- or, if you're lucky, two-bedroom flat on the zone 2/3 borders.” A quick scan on Zoopla confirms this. In order to qualify for Help to Buy, purchasers need a deposit of 5 per cent; 5 per cent of £485,830 is £24,291 – a savings figure that seems, in my circumstances, so vast I struggle to internalise its value.
Yes, I could move out of London – but that’s where the industry I work in is based, and I have no desire to move location just to buy a home.
Regardless, the cheapest region in which to get on the property ladder is the north-east of England. There, the average house price is £122,870, of which 5 per cent is £6,143 – certainly more attainable for some, but a figure that still feels impossible to me and to many people I know.
Buying out of London might be a false economy anyway. Research carried out by the Institute for Fiscal Studies in 2017 found that the north-east had one of the lowest average salaries in the country, especially for women. Female workers in the north-east will earn an average of £1,361 less per month than London-based men. Whichever way you slice it, this so-called “help” is useless to anyone on a low or medium income without family money behind them.
That's why I was not surprised to hear that the majority of people who bought a home thanks to Help to Buy were actually some of the most privileged already. A report released today from the National Audit Office showed that two-thirds of the people who benefited from the scheme would have been able to buy a property anyway. A small but not insignificant number of recipients (4 per cent, which according to my rudimentary maths equals 8,440 people) used the scheme even though they had a household income of more than £100,000.
Evidence shows that the scheme has also driven up house prices, further boosting the wealth profile of those who bought when the market was affordable and are now selling on to younger people at an inflated price because the failure of successive governments, Labour and Conservative and coalition, to build enough homes has caused demand to outstrip supply.
So who didn't benefit from Help to Buy? The more than one million people who are entitled to social housing but are sitting on waiting lists – in part because the homes that are built with government subsidies are being sold to well-off middle class people instead of offered at affordable prices to those who need them.
Neither has the scheme benefited young people on low incomes who are forced to live with their parents because they cannot afford to pay rising rents if they also want to eat, travel to work and socialise. Or, indeed, those who have been exploited by private landlords and agencies, looking to squeeze out every penny they can out of prospective tenants who, until very recently held barely any rights and protections.
Bizarrely, Help to Buy doesn't even benefit the government, which has been sinking scarce public funds into a volatile housing market without widening access to that market. It’s almost as though politicians invented a system designed to perpetuate impossible myths about home ownership while making people who are already rich richer – while simultaneously limiting opportunities for the poorest.
Even if Help to Buy had functioned to allow the less privileged to enter the housing market, it’s based upon the same false narrative that led to support for Margaret Thatcher’s Right to Buy scheme: that home ownership should be the ultimate goal for the majority of citizens.
It’s always surprising to me that millennials, notorious for prioritising “experiences” over possessions, are unable to shake the indoctrinated fetishisation of home ownership. I hear people who eschew every social norm imaginable talk about “getting on the housing ladder” and renting as the equivalent of “throwing money down the drain”, without considering the fact that in fact the ladder is more of an endless treadmill and that a mortgage requires you to throw a substantial amount of money down the drain too – except the drain belongs to a mortgage provider charging you interest for decades.
For many, buying a home has come to feel like a financial and logistical necessity. It can be the only way to ensure we will not end up destitute in retirement, or for people with young children to try and protect them against the upheaval of having to move homes (and often schools) on a regular basis.
Both these situations, important as they are, have a much simpler solutions: proper protection for tenants, more social housing, and a real welfare system which ensures all its citizens have a safety net should they become unable to work due to age, disability, caring obligations or an economic downturn. As was evidenced by the astronomic rise in home repossessions after the recession, buying property for the average person does not protect us against any of these circumstances.
If the government really wants to help young people, it ought to stop trying to coerce us into home ownership based on the economic doctrines of the past and start regulating the housing market which has for decades been skewed in favour of the rich. I for one will not be manipulated into believing that I need to buy a pile of bricks in order to increase my chances of economic stability. That psychological process benefits no one but the already wealthy.