Who benefits from the Government's Help to Buy scheme?
George Osborne wants you to believe that it'll be first time buyers. And to be sure, a lucky few will benefit. But Help to Buy is really a subsidy to bankers, developers, and people who already own property.
If you are a young person wanting to own your own home, and if you do not happen to be on the list of the lucky few who get a subsidized mortgage, house prices go up even further beyond your reach. Even if you do get a Help to Buy loan, what the Chancellor is doing is giving you more debt.
Help to Buy means first-time buyers borrow more. By making it easier for them to get mortgages, it pushes up property prices. It transfers wealth from people who don't own a house to people who do – and the bankers who lend them the money.
It's also good news for developers. Help to Buy encourages first-time buyers to borrow money from the taxpayer if they are buying a new build property. Osborne claims this will boost the housing supply. But he won't deal with the real reason there are too few houses: restrictive red-tape regulation. Help to Buy just uses unsuspecting first-time buyers to transfer taxpayers' money to big developers. It's classic crony corporatism.
Osborne economics is pushing up rents. His clampdown on buy-to-let will end up cutting the supply of rental properties, and raising the cost of renting as a result. Thanks to the Chancellor, young people face a double whammy of unaffordable property prices and higher rents.
Taxing buy-to-let isn't fair on pensioners either. Lots of people invested money in rental property after Gordon Brown raided their private pensions. Now his successor is eating their nest egg again.
The Chancellor is spending £10 billion on this subsidy alone. The Autumn Statement was littered with others. Osborne is quick to claim to be a Thatcherite. His real spirit guide is that ultimate corporatist Ted Heath.
Ted Heath once thought he had fixed the economy via various corporatist wheezes. It did not end well. Neither will the Osborne mortgage subsidy.
"A revolutionary text ... right up there with the Communist manifesto" - Dominic Lawson, Sunday Times
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