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.

 
 
 
 

To see how a city embraces remote work, just look to Helsinki

A deeply rooted culture of trust is crucial to the success of remote work. (Sean Gallup/Getty Images)

When I speak to Anssi Salminen, an account manager who lives an hour outside Helsinki, he’s working from a wooden platform on the edge of a Finnish lake. With a blanket laid out and his laptop set up, the sun low in the sky, Anssi’s remote work arrangement seems blissful. 

“I spend around half of my time working somewhere else other than the office,” he says. “I can work from home, or on the go, and I also travel to the Netherlands once a month and work from there.

“The emphasis in my work has always been that it doesn’t matter when or where I work, as long as I get things done.”

For many people around the world, the shift to remote work was sudden, sparked by the coronavirus pandemic. Finland, however, is finding the transition much less significant. Before Covid-19, the Nordic nation already displayed impressive levels of remote working, with 14.1% of its workforce reporting usually working from home. Only the Netherlands has a comparable percentage of remote workers, while the UK lagged behind at 4.7%, and the US’s remote workforce lingered at around 3.6%

Anssi works for one of many Helsinki-based companies that offers its employees flexible policies around when and where they work. That arrangement is in part due to the Finnish capital’s thriving start-up scene. In spite of being a relatively small city by global standards it is home to over 500 technology start-ups. These companies are leading the way when it comes to keeping employees connected wherever they choose to work.

“Our company has a completely location-free working policy,” says Kasper Pöyry, the CEO of Helsinki-headquartered software company Gapps. “All meetings are made available for online participants and facilitated accordingly. Some employees have worked extensively from abroad on a working holiday, whilst others prefer the comfort and social aspects of the well-stocked office. Whatever works for our employees is what works for the company.”

Like Gapps, many Helsinki-based firms are deeply preoccupied with providing the necessary technology to attract talent in a vast and sparsely populated country. Finland has only 15 inhabitants per square kilometre, and companies understand that in order to compose teams of specialised expertise, they may have to seek talent outside of the city. Local governments take a similarly proactive stance toward technological access, and Helsinki offers free, unrestricted, high-speed Wi-Fi from city-wide hotspots, while the country as a whole boasts some of the best coverage in Europe. 

But encouraging remote work isn’t just about optimising the potential of Finland’s workforce – companies in Helsinki also recognise that flexibility has clear benefits for both staff and employees. 

“The idea of a good work-life balance is ingrained in Finnish culture,” says Johannes Anttila, a consultant at organisational think tank Demos Helsinki. “It goes back to our rich history of social dialogue between labour unions and employers, but also to an interest in delineating the rules of working life and pushing towards people being able to enjoy their private life. Helsinki has been named the best city in the world for work-life balance, and I think that this underlies a lot of the mentality around remote work.” 

For Peter Seenan, the extent to which Helsinki residents value their free time and prioritise a work-life balance prompted his move to the city ten years ago. He now works for Finnair, and points to Finland’s summer cottages as an example of how important taking time to switch off is for people in the country. These rural residences, where city residents regularly uproot to enjoy the Nordic countryside, are so embedded in Finnish life that the country boasts around 1.8 million of them for its 5.5 million residents

“Flexible and remote work are very important to me because it means that I don’t feel like I’m getting stuck in a routine that I can’t control easily,” he says. “When I’m working outside of the office I’ll go down to my local sauna and go ice swimming during the working day, typically at lunchtime or mid-morning, and I’ll feel rejuvenated afterwards… In winter time especially, flexibility is important because it makes it easier to go outside during daylight hours. It’s certainly beneficial for my physical and mental health, and as a result my productivity improves.”

The relaxed attitude to working location seems to pay off – Finland is regularly named the happiest country in the world, scoring highly on measures such as how often its residents exercise and how much leisure time they enjoy. With large swathes of unspoiled countryside and a national obsession with the outdoors, sustainability is at the forefront of its inhabitants’ minds, leading to high levels of support for measures to limit commuting. In January, Finland passed a new Working Hours Act, the goal of which was to help better coordinate employee’s work and leisure time. Central to this is cementing in law that employees can independently decide how, when, and where they work.

Yet enacting the new ruling is not as simple as just sending employees home with their laptops. For Kirsimarja Blomqvist, a professor of knowledge management at LUT University, perhaps the most fundamental feature that remote work relies upon is a deeply rooted culture of trust, which Helsinki’s residents speak of with pride. The anecdotal evidence is backed up by data which suggests that Finland boasts one of the highest levels of trust and social cohesion in Europe, and equality and transparency have always been key cornerstones of political thought in the country.

“Trust is part of a national culture in Finland – it’s important and people value it highly,” she explains. “There’s good job independence, and people are valued in terms of what they do, not how many hours they work for. Organisations tend to be non-hierarchical, and there is a rich history of cooperation between trade unions, employers, and employees to set up innovative working practices and make workers feel trusted and valued. 

“It’s now important that we ensure that this trust can continue to be built over technology, when workers might have been more used to building it face-to-face.”

As companies begin to look hopefully toward a post-Covid future, the complexities of remote work are apparent. Yet amid issues of privacy, presenteeism, and social isolation, the Helsinki model demonstrates the potential benefits of a distanced working world. The adjustment to remote work, if continued after the crisis, offers a chance to improve companies’ geographical diversity and for employers to demonstrate trust in their workforce. On these issues, Blomqvist believes other cities and employers can learn a lot from Helsinki.

“People are now beginning to return to their workplaces, but even as they do they are starting to consider the crisis as a jumping point to an even more remote future,” she says. “The coronavirus pandemic has been an eye-opener, and people are now interested in learning from Finland’s good practices… We are able to see the opportunity, and the rapid transition to remote work will allow other countries to do the same.”

Katie Bishop is a freelance writer based in Oxford.