The aim

•“red tape over planning procedures and mortgage loans are hampering

the growth of the house building industry”

•“alongside this are we turning into a nation of renters, more in line with

the European view of property ownership?”

•“what is the impact of Help to Buy?”

Context: the market

•Land values remain low and the economy weak

•Increasing rate of private renting, but rents not more expensive than

mortgages in half of the UK

•Government actively seeks to unblock planning hold ups through

“Atlas”

•2,291 home purchases completed under New Buy (to March 31)

•3,000 reservations per week under Help to Buy: since it started…

Mortgage lending

17%

Housing starts

15%

House prices

3.1%

12,500Help to Buy transactions

since launched

Housebuilder views: pre H2B

The constraint on mortgages has been an encumbrance to sales

The whole market had started to stagnate [due to] large deposits and restricted lending on mortgages… There was a real shortage of first time buyer funding available

The overall mortgage pot has shrunk, very substantially, and if there is less money available then clearly it is going to go to those parts of the market that are high value and lower risk

After the 2007 property bubble and subsequent crash, the market needed to rebalance. This happened between 2007 and late 2012. By the end of 2012 there was a good match between demand and availability

• Some players left the market / merged and those left have less capital

Housebuilder views: pre H2B

“We had NewBuy come in 18 months ago which was quite a difficult process with banks and mortgage lenders. That had an immediate effect, [but] slow uptake... The reasons are the fees payable etc.”

“The problem that we had in the industry was we all had quite a lot of cash locked up in the balance sheet for these products.”

“The other problem was with us having to contribute half as well; you were basically spending a lot of your working capital.”

• New Buy and builders’ shared equity schemes – limited success

Top barriers to buying•High property prices, mortgage availability and difficulty in qualifying are the top barriers

Impacts of crash•Main impacts are securing mortgages, increased concern about children’s future and retaining any disposable income

Impacts of crash•Main impacts are securing mortgages, increased concern about children’s future and retaining any disposable income

Especially renters (41%)

and younger people:

18-24 yr olds (43%) and <45 yr olds (32%) more likely than 45-64 yr olds (9%)

Especially homeowners (67%)

and 45+yr olds (74%)

and C2 (70%)

18-24 yr olds (18%) less likely than all others

Help to Buy•Half of those who have or are actively considering buying a home have heard of Help to Buy (52%), under a third of these think it will help them.

18-24 year oldsC1 / DERenters

HTB applicants/ intenders

AB

C2

Homeowners

55+ yr olds

Hel

pfu

lnes

s

Awareness

Builders’ attitudes to H2B

Hel

pfu

lnes

s

Helped increase funding availability

Lenders responding positively to HTB

Better than NewBuy/ First Buy

Helped to rebuild confidence and competition in the mortgage market

Enquiries, off-plan sales & building rates

Scope well designed

How sustainable is it?

Funding may run out before the end of 3 yrs

What happens when it finishes?

Positive

Negative

“Good for housebuilders, but not for taxpayers.”

Mortgage Guarantee

Hel

pfu

lnes

s

Expected to involve a range of lenders

Lenders offering “decent rates and not restricting it through other mechanisms”

Hope offers may be designed to assist the second hand market

Controls in place to avoid boom and bust

Scope too broad?

Introduced too late

How long is the quota going to last?

May lead to increased house prices

Hiding an underlying wider market fragility?

Positive

Negative

T&Cs unknown Too early to say

Perceived impact of H2B•Overwhelmingly positive!

“Things have been improving in the mortgage market over the last period.”

“Increased sales ... Help to Buy really helped the market”

"Definitely is stimulating house building. The equity loan ticks all the boxes for affordability of house purchases... it's given us a much more confident position than we were pre-budget”

“We should get more normalisation, standard 90-95% mortgages coming back at more favourable rates..”

Perceived impact of H2B•Overwhelmingly positive… BUT!

“We also need a functioning planning system and we need to tackle regulatory burdens on the industry.”

“I see this as being not in place beyond May 2015 and the election”

“I think there are a lot of things happening at the moment, not just Help to Buy”

“[Lack of] capacity in terms of skills, bringing trades, sub contractors, suppliers. Also the ability to recruit good staff, as the industry lost a lot of good staff in the down turn.”

Help to Buy: Boom or Bubble?