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osbornehtbgag2HELP TO BUY: THE FACTS

In November 2012, George Osborne made £450,000 profit selling his taxpayer-funded second home

It’s time the Opposition told people just how big a political con Help to Buy is, why it is using public money to reelect the Conservatives, how it only helps Tory donors in the construction industry, and why it can only make Britain’s housing problems worse. The Slog offers a briefing to the Ed Miller Band ahead of PMQs tomorrow.

Some of you may not have realised this, but take a squint at this excerpt from the Government’s guide to Help to Buy (HTB) – emphases are mine:

‘The Help to Buy initiative involves an equity loan scheme which is available onnew build properties up to the value of £600,000. There is no salary cap for purchasers, and it is available to both first time buyers and existing home owners. Eligible purchasers receive a Government loan of 20%, which means that they only need to put down a 5% deposit and obtain a 75% loan-to-value mortgage…’

I promise you this isn’t a cut down or doctored quote. Here are my observations:

1. New build only = yet another corrupt repayment of the Construction sector’s Tory Party donation.Indeed, the YOY new-build total is up from 22,158 in 2012 to 31,576 in 2013. That’s a 32% uplift: not bad value for a donation of 5 million quid. However…

2. There are 22,539,000 private houses altogether in Britain. So in any given year, the Government is going to be stimulating almost exactly 0.0013% of the market. That’s how atypically biased the favour being repaid the skew of this sort of ‘property QE’ is. Nevertheless – and this is the really spooky bit – …..

3. Although the scheme was loudly trailered in the Budget (and only 13 houses in 10,000 are eligible) the property market has risen some 5.8% YOY – and 1% in October alone….yet the scheme has only been going for five weeks. So in five weeks, we’re led to believe that a scheme applying to slightly more than one UK property in a thousand has driven prices up 1% during that time. This may well be living proof of the fact that markets do indeed decide – because markets are made up of people, most of whom are complete morons. However,

4. Although the Government has no real right to claim its scheme has had any direct effect on prices, the bizarre thing is that the indirect effect is seriously into massive bubble territory: that is, at a rate of roughly one thousand times the actual market movement. And just to compound the hypocrisy involved here…

5. So far just one completion has occurred on the HTB scheme. The speed at which most lawyers work makes that hardly surprising, but don’t forget that theavailability of the scheme has been known about since April….and estate agents have been putting people down for the scheme since then. 4,000 people reserved new homes in June alone….but since then, just the one has completed. Ironically…

6…..the one completion was on Merseyside. New house building in that region is a staggeringly small 423 properties…or less than 1/60th of the national total. Unsurprisingly, the new starts are mainly in Toryland: well over 12,000 of all starts are in London and the South East – that’s about 36% of the entire total.

7. The real cost to the Treasury of this scheme is going to be about one half of a peanut in the context of the Bank of England’s QE operation. Let’s be generous and take that figure of 4,000 registrations a month – 48,000 a year – and then be very generous and say that 80% of them complete: that’s 38,400 per annum at risk. And let’s suppose that the average price paid (based on the figures) will have a strong southern bias, and thus put the average price at around £450,000. The Government is putting up 20% of that, so in a given year the scheme will put a maximum of £2.3bn of taxpayers’ money at risk. A small price to pay for creating enough feelgood to get you reelected…and not a penny coming out of the Conservative Party’s vast overdraft. Nice work if you can get it. Sadly….

8. ….for those not yet on the ladder, at this rate of market stimulation, it is going to make it – between now and May 2015 – 20% harder for first time buyers to raise the funds they need to buy a home. But most of them won’t be Tory voters, and most of them live in the North where the Tory vote is poor….so who GsAF, eh? Not Sebastian Michael Green-Shappsfox, that’s for sure.

It’s about as classic a case of misuse of public funds to repay a donation and win an election as you’ll ever find. But in Westminster now – on either side of the House – such behaviour is a daily occurrence. It’s a smoke-and-mirrors scam and a wheeze, for which Osborne, Shapps, Hunt, Brown, Balls, Blair, Cameron, Yeo, Johnson and all the rest of these gargoyles are justly infamous.

This is how I’d sum up what the Help-to-Buy scheme is likely to turn into:

AT BEST, a low completion rate and tiny real effect on prices will be exacerbated by the stock markets collapsing, rising interest rates that leave many people in negative equity (again) in turn causing the racket to rebound on the Conservative Party, who will lose heavily in 2015, fire Grant Shapps….and hand over to a Labour Government of equal cluelessness.

AT WORST, a biased, minute and corrupt scheme to help dishonest Estate Agents talk the market up and sucker in the financially illiterate. It will compound the North/South divide, exacerbate the housing problems of the North, dig up more of our finest countryside, make ownership tougher for future first time buyers, and create an inflationary housing bubble of no purpose to the economy whatsoever.

When everyone has a vote in a democracy – but the electorate is under-educated and distracted by a biased media set – politicians and their paymasters can (if lacking in any genuine moral standards or concept of public service) get away with everything from security services murder to the installation of a de facto dictatorship. If the legislative Opposition is in turn neutered by an obsession with focus group, soundbite and kneejerk, then the only remaining thing you need to threaten liberty itself is econo-fiscal meltdown.

We keep being fed complete nonsense about Britain having turned a corner. But the only thing coming round the corner towards us is the last piece in that previous paragraph’s jigsaw of commercial authoritarianism.

I’m sorry it’s so cheerless at The Slog these days. Give me something genuine to cheer about, and I’ll happily print it.

www.hat4uk.wordpress.com / link to original article

blogged from here…

sweetwillowman ~ Share the truth … Share Love and Harmony… Namaste’

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