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Thursday, March 27, 2008

Getting onto the housing market

This morning's Western Mail covers my press release from yesterday on the decision by the Assembly Government to axe the Homebuy scheme for first time buyers. There is no doubt that there were flaws in this scheme but, rather than abandon it altogether, the Minister could have reformed it and turned it into a Wales-wide key-workers housing programme.

The news of this u-turn by the Labour-Plaid Administration came in a letter from Jocelyn Davies AM, Deputy Minister for Housing, in response to my question on the 12th March on the future of the Homebuy scheme. The letter states that the government have made no Social Housing Grant allocations for Homebuy for the year 2008/09 and beyond, although homes built to rent by housing associations could be sold to applicants on Homebuy terms.

Homebuy was upgraded in 2000 when I was Deputy Minister for Housing and was designed to help first time home buyers in rural areas by providing a fifty per cent share in the cost of purchasing a home. The state’s share would be protected by a mortgage and re-claimed when the owner sold the property.

There was a very real possibility that this scheme could have been transformed into a key workers housing programme for both urban and rural areas, with its own budget and proper accountability and transparency. Public sector workers such as teachers and nurses would then have been able to use it to buy and own their own homes at affordable prices. This decision is a missed opportunity.

I am also disturbed that the Government is now limiting Homebuy to properties which have been built for rent. Even with built-in safeguards giving a housing association first refusal on buying back the property, this will reduce the number of affordable rented homes available for the 80,000 plus households on housing waiting lists in Wales.
But Peter, if the government did as you asked the price of housing would just go up. I'm no economist but the government pumping money into a tight-supply market like private housing will just add to housing inflation - and undermine non-key workers ability to get onto the property ladder.

I am anyway puzzled why people "must live in their own house".
No this is not a grant but a deferred mortgage from the government. As such it is unlikely to have much impact on the market.
It doesn't matter a hoot what "it" is called - the government will be pumping money into a market which will inevitably boost house prices. I would hazard a guess that one of the main reasons house prices went up so fast was because of low interest rates and liberal flow of mortgages into the market place. PS Where did u get that shirt?
I disagree, the review of the former Homebuy scheme certainly did not identify such a problem and there is no reason why it should have done. To be frank the number of properties involved are too few to have had such an impact and I believe the same would apply to a more comprehensive key worker scheme as well.
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