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One of Parliament’s “slimiest, nastiest MPs” has got stuck into his new job, putting out a press release on how the hideously ill-judged ‘Help to Buy’ housing scheme is “surging ahead”.
Kris Hopkins, the Conservative MP for Keighley whose only previous claims to fame were allegations that “gangs of Muslim men were going around raping white kids” (thanks to Johnny Void for that one) and a Twitter spat with the odious Philip Davies, said the equity loan scheme had driven up the rate of house building and captured the public imagination with more than 15,000 reservations for new-build homes in its first six months.
Reality check: House building is at its lowest level since the 1920s. In the 2012-13 financial year, only 135,117 new homes were completed – the lowest number on record.
Earlier this year, Hopkins called for Conservatives to unite behind David Cameron – to which Nadine Dorries responded, “pass the sick bag”. Yesterday, he at least was united behind Cameron – as they toured a Northampton housing development.
According to the press release, he said government action to restore confidence to the housing market was working, with over a third of a million new homes built over the last 3 years, including 150,000 affordable homes.
Reality check: That is a lower number than any period on record prior to the current Coalition government. It is not an achievement. It is a disaster.
Under the equity loan scheme, buyers can get mortgages on new build homes with a five per cent deposit, with the rest provided by an equity loan from the government of up to 20 per cent on properties with a value of £600,000 or less.
Yesterday (October 8), Cameron and his Chancellor, George Osborne, launched the second part of Help to Buy – the mortgage guarantee – which will also be available on existing properties worth £600,000 or less. Lenders will be able to offer a 95 per cent loan-to-value mortgage, made possible by a government guarantee to the lender of up to 15 per cent of the value of the property.
Reality check: In English, this means the taxpayer is underwriting people’s mortgages. Osborne reckons he has put aside £12 billion for this part of the scheme but – as former Chancellor Alistair Darling recently noted – the source is unidentified. “Strange that when Labour makes promises, the Tories claim it will mean more borrowing, yet it’s fine for them to make unfunded promises,” Mr Darling wrote.
Back to the press release: “Housebuilding is growing at its fastest rate for 10 years,” it says.
Reality check: The Channel 4 article, quoted above, warns us to “take the proclamations we are getting from the government about high rates of growth in housebuilding with a hefty pinch of salt. Housebuilding completions are starting from modern record lows; the rates of growth are bound to be high.”
What does Kris Hopkins have to say about this? Not a lot, in fact. He blathers that the equity loan has “captured the imagination of the public and is boosting the supply of new homes across the country”.
Reality check: Back to Channel 4 – “The levels… show that something went wrong in 12/13. Turning the corner means going from abysmal to terrible.”
“Our policies on housing are working,” said Hopkins in the press release. “Housebuilding is growing at its fastest rate for 10 years, and the tough decisions we’ve taken to tackle the deficit have kept interest rates low and are now delivering real help to hardworking people.”
Reality check: We’ve already covered the speed at which house building is growing; he should not be pretending this is a huge success when the number of new houses being built has fallen to a record low. As for the policy on the deficit keeping interest rates low – Vox Political blew that out of the water months ago. For clarity: A government can always service its debt, if that debt is in its own currency. Our debt is in UK pounds and we can always service it. Our creditors know that, so they remain happy to continue financing it. Otherwise, with Osborne borrowing 75 per cent more than he said he would in 2010, and with the UK’s ‘AAA’ credit rating gone in a puff of agency doubt earlier this year, Osborne would have been up a certain creek without an economic lever (to mix a metaphor or two).
“I’m delighted we’ve launched the second part of Help to Buy, the mortgage guarantee, which will strengthen the package of measures that have already done so much to restore confidence in the housing market,” Hopkins concluded.
Final reality check: Michael Meacher is one of many who believe that ‘Help to Buy’ will do nothing more than create another housing price ‘bubble’, most likely leading to another debt crisis. “Even [George Osborne’s] Tory supporters believe [this] will throw oil on the fire of the already overheated surge in house prices,” he wrote.
Meanwhile, at the other end of Britain’s housing market, 50,000 people are facing eviction because of the Bedroom Tax.
Jonathan Wilson said:
You know I had to re-read the section “over 1/3 of a million houses” a good few times before I got the gist of what you were saying directly below it about it being very low….
The reason being that the last part of the sentence is easily missed, skipped, or not taken into account. At first glance it seems as though 300,000 houses are built which seems quite good, in fact huge compared to 135,117… because its easy to not see the hidden sum/duration of “3 years.”
It really does annoy me when ministers mislead by using easily overlooked variables, as above, or by using numbers from differing parts of funding to give a biased and misleading statistic; such as using the total expenditure for benefits, including pensions and in work benefits, when talking about a small subsection of it such as ESA or JSA or quoting just the headline figure of both benefit fraud and mistakes together in relation to its cheats and scroungers narrative and not as a % of the individual budgets which considering mistakes cost more than fraud is downright misleading and unrepresentative.
Jonathan Wilson said:
On the subject of “unfunded” surely that is only a problem if people default? Until such time as they do the government doesn’t need to find/budget/or allocate the cash in any meaningful way?
That said, if they cause a bubble and it bursts then its likely that the cash will need to be found at the same time as the economy is potentially thrown into reverse and people underwritten by gov loose jobs or walk away knowing that the gov is in hock for 15%, the banks win because they can afford to loose 20% of the mortgage value and still have no loss (15% gov + 5% deposit) and the person mortgaged “win” as their loss is limited to the initial deposit and anything over a15% write down (assuming I am understanding how this works correctly)
Oh well never mind, its not like the americans had the same problem with their “private” banks freddy and fanny who underwrote mortgages for people who couldn’t afford them so they too could be a part of the american dream of owning their own house.. its not like that turned out bad for anyone is it?
Mike Sivier said:
The people who are mortgaged would also lose because they would lose their new house, wouldn’t they?
Reblogged this on thepositivevoice.
Eric Jarvis said:
The whole objective is to create another housing bubble. That’s why property developers and builders paid Grant Shapps so much money to get it set up in the first place. A housing bubble is great news for property developers, the people who get stuck with the downside of both the rise and fall in prices are ordinary mortgage holders and desperate first time buyers. The government know this perfectly well. After all a good half the Cabinet have extensive financial interests in property companies.
Ann Sanderson said:
who earns enough to go for mortgages, even £100,000 but up to £600,000 – so who will gain the £12bn help: this £12bn would be better spent building affordables for the working class; this govt is robbing the poor to give to the rich whilst demeaning over time the rights of the people eg gagging law, hoping to get rid of human rights law,.. 5% tax cut to megarich; business rates relief for many; legal tax avoidance schemes; Then the acceptance of zero hour contracts, work for benefits; whilst us at the bottom losing jobs, unemployed and targetted; disabled badly treated; deaths of innocent people with too much pressure to live with; wont belong before beds in sheds; tent cities; etc will be visible throughout the country the way sanctioning is taking place and the way bedroom is hitting hard; legal aid restrictions have hit the poor hard so if you get the wrong arm amputed you cannot complain as there is no legal aid to do this and therefore so much will go unreported – what a state of affairs; even the poor cannot get legal aid to get divorced from a cheating or domestic violence abuser etc; but who betide you if you complain after May (as Im sure the law will get approved) what will be th e penalties for breaking the gagging law and speaking up about, eg, bedroom tax …… any ideas
C. Pascoe said:
And what is going to happen when the inevitable happens…… the people that bought their houses so quickly, will lose them just as quickly. That could mean another 500k or maybe more homeless. And the banks? They’ll just be patting their back pockets & grinning.
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Paul Smyth said:
Reblogged this on The Greater Fool.
Reblogged this on HUMAN RIGHTS & THE SIEGE OF BRITAIN POLITICAL JOURNAL.
Reblogged this on HUMAN RIGHTS & THE SIEGE OF BRITAIN POLITICAL JOURNAL.
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