The links between Help to Buy, let to buy and buy to let

David Cameron has been quick to sing the praises of Help to Buy just 2 months into the scheme. Given the relatively early timing of his words we might expect some note of caution, perhaps that ‘there is still a lot of work to do’ or ‘it’s early days’. But the Prime Minister was wholly enthusiastic, talking of people now ‘owning their dream home’ and realising ‘the dream of home ownership’. Passionate stuff. In fact one can see this more as a vigorous defence of HTB against its critics rather than the outright love ode it seems to be.

It’s fair to ask what the criticisms are and the role buy to let has to play. The fundamental problem, according to critics, is that Help to Buy will drive up house prices and make things even harder for the first time buyers which it’s meant to help. This is a pretty reasonable conclusion as demand will increase while supply remains constant. Furthermore, with house prices already booming there is the growing practice of let to buy, something Rentify has been quick to notice (and be quoted on!). Let to buy is when homeowners choose to let out a property rather than sell (so as to benefit from the boom), and then buy a new home by releasing cash from the old one. This is a good way for people to ‘test the water’ as landlords but it will also contribute to keeping supply down.

Yesterday, an FT article stated that ‘some observers have given warning that [Help to Buy] is open to abuse from buy to let investors’. This is a confusing assessment when Help to Buy is available neither for buy to let properties, nor for second homes (so it can’t help let to buy). One assumes the FT means that Help to Buy will help buy to let indirectly by fuelling an increase in house prices and demand for rentals. But the phrasing of the comment reveals an unfair and prejudiced view of landlords, who simply want to make the best of any investment. If Help to Buy ultimately proves to be unsuccessful, it’s the Government which must accept any blame.

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