Don’t vilify housebuilders for profiting from Help to Buy

Was Help to Buy a timely market intervention with a valid social purpose or a political gimmick that unintentionally showered housebuilders with taxpayers’ cash? Or both: this isn’t a straightforward question.

‘This government supports those who dream of owning their own home,’ said a statement from Philip Hammond last week. So far the ‘equity loan scheme’ launched by George Osborne in 2013 and now extended until 2023 has underpinned 194,000 home sales, the great majority to first-time buyers in the provinces, while another 300,000 have been supported by a £3,000 savings top-up.

Meanwhile, housebuilders have upped their game as Osborne wished: annual new home numbers, having almost halved by 2013 from a pre-crisis peak of 200,000, climbed back to 184,000 in 2016/17. And politicos might claim that happy home-owners are more likely to vote Tory, another factor which doubtless weighed for the former chancellor: without Help to Buy, Theresa May would have looked even weaker after the 2017 election and the progress of Brexit would have been even more chaotic.

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So much for the positives: the policy has given thousands a leg onto the property ladder, across the north-south divide, while bringing needed stimulus to the construction sector. But other consequences of Help to Buy are glaring: it has inflated new house prices and builders’ margins, resulting in huge dividends for shareholders in major housebuilding firms and a particularly eye-catching £1 billion profit for the sector’s pantomime villain Persimmon, already notorious for giant boardroom bonuses. That big number equated to £66,000 profit for every house Persimmon sold last year, half of them under Help to Buy.

Companies exist to generate rewards for investors and should not be vilified for making the most of ministerial wheezes that work to their advantage, so long as they deliver what ministers want — in this case, more houses.