The government will introduce 30 per cent discounts for local first-time buyers, and key workers; details are scant but presumably this will be off the market price of new-build properties. It looks like a Help to Buy mark 2 but that in itself is not why I am doubtful.
Are we simply offering too much to first-time buyers and not enough to other demographic sectors of the market?
Look at what FTBs have already in the way of incentives:
- Stamp Duty relief: First timers buying properties up to £500,000 pay no SDLT on the first £300,000; they pay SDLT on the remaining amount, up to £200,000;
- Help to Buy ISA, just finished: It was a tax-free saving where the government topped up every £200 of savings with a £50 publicly-funded bonus;
- Help to Buy Equity Loan: This is a government-backed loan of 20 per cent of a home’s value (or, if you’re in London, 40 per cent). FTBs themselves have to stump up only a five per cent deposit. Existing account holders have until late 2030 to claim the bonus;
- Lifetime ISA: Anyone aged 18 to 39, not currently a home owner, can save £4,000 a year and get a 25 per cent bonus from the government on top;
- Starter Home initiative: The government is relaunching this after an embarrassing fail-ure so far, but in theory it will see 200,000 new build homes in England sold to first-time buyers with a 20 per cent discount;
- Shared Ownership: there are many issues surrounding SO, not all good, but it allows 25 to 75 per cent of specific properties to be purchased;
- London Priority: London Mayor Sadiq Khan is preparing a ‘first-time buyer priority’ scheme restricting sales of new builds to local UK buyers, preferably FTBs, before units are offered to investors or non-local purchasers.
I firmly believe that the young adult generation is genuinely hard done by - it’s missed out on inexorably rising house prices enjoyed by parents, it has horrendous deposits to find, and it faces a shortage of rental supply that means rents are high.
Yet on the plus side they have this raft of schemes, largely or solely aimed at getting on the housing ladder.
Do we really need another one, with a 30 per cent reduction?
The new scheme will encounter inevitable definitional issues - for example, who is ‘lo-cal’? and what is a ‘first-time buyer’ if a couple consists of one existing home owner?
It will also, quite fairly, be mocked if it turns out to be another scheme (like Help to Buy) which appears geared to helping house builders’ profits more than FTB aspirations.
But even if it works well, is it needed?
Figures from NAEA Propertymark show that in October 2019 some 27 per cent of all sales were to FTBs - well up on the 23 per cent of a year earlier. And at some points in 2019 the proportion hit 30 per cent.
If we have this wide range of carrots to help FTBs already, should the government not have been looking at incentivising other demographics in the market instead or as well?
An obvious one is downsizers: there would be definitional problems here, too, but you can imagine that a stamp duty holiday for those moving from, say, four bedroom houses or larger to homes with three bedrooms or fewer would help market movement overall.
I’m not aiming to be a Scrooge, and I genuinely do feel younger adults are victims of a society geared largely to older people - but on this occasion, on this specific issue of help-ing to buy, I wonder if the government might not have a more effective way of encourag-ing home ownership overall by introducing other and wider incentives.
‘Nuff said by me - now go and have a Merry Christmas!
*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting about all things property at @PropertyJourn