Help to Buy is finally being scrapped. Here’s why it was a terrible idea

Oooh, a house. Image: Getty.

Buried in last autumn’s budget announcement was the news the the government’s Help to Buy (HtB) scheme would finally wind up in 2023. Which is long overdue considering it could finish tomorrow and that still wouldn’t be soon enough.

Introduced in 2013, the scheme was one of the flagship policies of the coalition government. It was meant to get a new generation of people onto the “housing ladder” – that semi-mythical place of milk and honey where your money works for you and everyone votes Tory. But what it’s actually done is passed huge profits to developers and screwed over the very people who bought into it.

Key to the scheme was the “Equity Loan”. As long as the buyer could stump up 5 per cent of the total cost of the property as a deposit, the government would provide a loan of 20 per cent. The final 75 per cent would be reached through a conventional mortgage. But there are requirements.

One of the requirements of the HtB Equity Loans is that the home being brought is newly built. Now this of course comes with advantages – often they have ten-year warranties, built with modern materials and to modern specs.

But there is a cost for those fresh-out-the-packet homes – what’s known as the “new-build premium”. Across England and Wales new-builds command a 16 per cent higher price than comparable properties in the area.

And just as a new car loses its value when it’s driven out the lot, once a new-build is lived in it starts to lose that premium. The average new-build loses around half its premium when it is sold for the first time. Suddenly the bottom rung of the ladder doesn’t seem so sturdy.


Another requirement of the scheme is that the property being bought is from “a registered Help to Buy builder”. This has the even more perverse effect of adding another premium onto the price that the first-time buyers are paying. A 2017 Morgan Stanley report found that builders could charge an extra 5 per cent for the properties sold through the scheme.

So between the new-build premium and the Help to Buy premium, the latter of which evaporates on purchase, people buying through HtB are paying 21 per cent over the odds.

Now if property were guaranteed to appreciate in value at those pre-2008 levels then it would still make sense. But that’s unlikely. Some assessments are predicting a 25-35 per cent fall in house prices in the case of a no-deal Brexit. Even if this on the cynical side, you know it’s not going to be pretty.

For developers, the scheme is brilliant. They no longer need to contribute any capital to support the sale of new-builds, so there is so much less risk involved. And this means they can rake it in. In a fairly excruciating video, the CEO of Persimmon Homes (a HtB builder) refused to answer questions from a BBC journalist about a £75m bonus.

Which makes the real winners of Help to Buy those whose bonuses are being propped up at the expense of those it is meant to help – and suddenly it’s easy to see why the scheme must be scrapped. But for the 400,000 first-time buyers who have already used it, it might just turn out to be a terrible deal.

 
 
 
 

London’s rail and tube map is out of control

Aaaaaargh. Image: Getty.

The geographical limits of London’s official rail maps have always been slightly arbitrary. Far-flung commuter towns like Amersham, Chesham and Epping are all on there, because they have tube stations. Meanwhile, places like Esher or Walton-on-Thames – much closer to the city proper, inside the M25, and a contiguous part of the built up area – aren’t, because they fall outside the Greater London and aren’t served by Transport for London (TfL) services. This is pretty aggravating, but we are where we are.

But then a few years ago, TfL decided to show more non-London services on its combined Tube & Rail Map. It started with a few stations slightly outside the city limits, but where you could you use your Oyster card. Then said card started being accepted at Gatwick Airport station – and so, since how to get to a major airport is a fairly useful piece of information to impart to passengers, TfL’s cartographers added that line too, even though it meant including stations bloody miles away.

And now the latest version seems to have cast all logic to the wind. Look at this:

Oh, no. Click to expand. Image: TfL.

The logic for including the line to Reading is that it’s now served by TfL Rail, a route which will be part of the Elizabeth Line/Crossrail, when they eventually, finally happen. But you can tell something’s gone wrong here from the fact that showing the route, to a town which is well known for being directly west of London, requires an awkward right-angle which makes it look like the line turns north, presumably because otherwise there’d be no way of showing it on the map.

What’s more, this means that a station 36 miles from central London gets to be on the map, while Esher – barely a third of that distance out – doesn’t. Nor does Windsor & Eton Central, because it’s served by a branchline from Slough rather than TfL Rail trains, even though as a fairly major tourist destination it’d probably be the sort of place that at least some users of this map might want to know how to get to.

There’s more. Luton Airport Parkway is now on the map, presumably on the basis that Gatwick is. But that station doesn’t accept Oyster cards yet, so you get this:

Gah. Click to expand. Image: TfL.

There’s a line, incidentally, between Watford Junction and St Albans Abbey, which is just down the road from St Albans City. Is that line shown on the map? No it is not.

Also not shown on the map: either Luton itself, just one stop up the line from Luton Airport Parkway, or Stansted Airport, even though it’s an airport and not much further out than places which are on the map. Somewhere that is, however, is Welwyn Garden City, which doesn’t accept Oyster, isn’t served by TfL trains and also – this feels important – isn’t an airport.

And meanwhile a large chunk of Surrey suburbia inside the M25 isn’t shown, even though it must have a greater claim to be a part of London’s rail network than bloody Reading.

The result of all these decisions is that the map covers an entirely baffling area whose shape makes no sense whatsoever. Here’s an extremely rough map:

Just, what? Image: Google Maps/CityMetric.

I mean that’s just ridiculous isn’t it.

While we’re at it: the latest version shows the piers from which you can get boats on the Thames. Except for when it doesn’t because they’re not near a station – for example, Greenland Pier, just across the Thames to the west of the Isle of Dogs, shown here with CityMetric’s usual artistic flair.

Spot the missing pier. You can’t, because it’s missing. Image: TfL/CityMetric.

I’m sure there must be a logic to all of this. It’s just that I fear the logic is “what makes life easier for the TfL cartography team” rather than “what is actually valuable information for London’s rail passengers”.

And don’t even get me started on this monstrosity.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.