News that the SNP is set to put aside £70 million to help families on low to moderate incomes climb aboard the property ladder has obviously made headlines as we move towards the general election. This is yet another example of politicians using taxpayer’s money to attract their attention and hopefully attract their votes as we approach what many believe will be the most competitive general election in the UK for many years. So what are the politicians offering and will this change the minds of people looking to vote?
The Scottish National Party under Nicola Sturgeon has put aside £70 million to be spent in the 2015/16 tax year. In simple terms this scheme will offer tax-free loans as a percentage of the cost of a property making up any shortfall which buyers experience. Those who can offer mortgage and savings cover of between 60% and 90% of the value of a new build property would be offered this government assistance. In effect the government will be taking a stake in your property which will be repaid at some point in the future.
In some ways this is an extension of the UK government’s help to buy scheme which has assisted many people in climbing aboard the property ladder for the first time.
Will this really make a difference?
You do not have to read many property publications to realise that first-time buyers are struggling to climb aboard the property ladder. As the cost of property continues to move ahead, with household incomes unable to keep pace, the gap between funds available and funds required for first-time buyers is growing. There is no doubt that schemes such as that announced by the SNP will assist many people and will prove very useful but are they just a short-term fix?
The simple fact is that the UK as a whole is not building enough new build properties, or indeed fully utilising those available, and this has been the case for many years. There has been a suspicion for some time that successive governments maintain relatively small new build numbers in order to maintain an interest in property and push prices higher in the long term. While this has protected the value of those able to climb aboard the property ladder in years gone by it has pushed prices way beyond the reach of first-time buyers in many areas of the country.
Are they ignoring the real problem?
There is no doubt that while the governments of today and yesteryear have promised to increase the number of new build properties in the UK this just never seems to materialise. The short-term fixes, in the shape of financial assistance and equity stakes in property, do grab the headlines, do help people in the short-term but they do nothing for the long-term problem. Indeed many experts believe that these short-term funding initiatives actually exacerbate the problem leaving more and more people out in the cold in years to come.
As ever, politicians are simply after a short-term fix to grab your attention and hopefully grab your vote. Whether the UK electorate will fall for this bribe remains to be seen.