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Steve Midgley: Help to Buy may have its critics. But as a small builder, I'm all in favour

Steve Midgley is Managing Director of Fairgrove Homes.

Over the last few weeks, I have seen a fair bit of criticism of the new Help to Buy schemes. But  to kickstart construction, it is vital that we have action - even if it is only temporary - to tackle the drought in mortgage finance.

As a small family-run builder in the Midlands, when the economic crash hit in 2008, we were badly affected. Today, five years later, we are starting to see signs of a real recovery. But the legacy of the financial crisis – particularly a lack of mortgages - is stifling the housing market and house-building.

Housing construction is one of the best ways to stimulate the economy. Every £1 spent on construction creates around £3 of activity; hundreds of thousands of people are employed in house-building and related industries; there are hardly any imports in housing construction so domestic economic growth is stimulated. And of course we all know that we need more homes.

There are three main factors which affect levels of house building:

Over the long-term, the main constraint has been the planning system and the lack of permissioned and viable land for new homes. In the last couple of decades, a huge burden of regulation has stifled construction and harmed companies like mine. But most importantly, the short-term constraint we face now is the lack of mortgage finance available.

While the current Government has made changes to the planning system - and the industry is hopeful that they will bring positive results - time will tell the full impact they have. Action tackling regulation has been slow, and red tape remains a serious handicap to my business growing and building more houses.

On mortgage finance, however, the Government has obviously understood the need for immediate and tangible action. The Help to Buy schemes announced in the Budget could have a transformational effect on house-building. The equity loan part follows on from a very similar scheme called FirstBuy and only applies to new homes.

FirstBuy originally was difficult to use for smaller companies like ours - it required a certain scale and significant investment up front.  But this new scheme is much easier and should be far more widespread. The industry's trade body, the Home Builders Federation, says that there have already been more than 3000 reservations through Help to Buy in just two months and on Friday my company got our agreement from the Homes and Communities Agency allowing us to use it.

It’s almost working too well, as my son has risked parental wrath by reserving his first home using Help to Buy with one of our local rivals! For us, Help to Buy will quickly increase sales. We will be able to increase construction output and build more homes in our local area. Everyone around us will benefit with more jobs and opportunities for businesses and related companies to grow.

The mortgage guarantee aspect of the Help to Buy scheme will follow on from, and run alongside, NewBuy. NewBuy was conceived of by the house building industry with mortgage lenders and supported by government.  It has proved significant. After slow take up, we are now seeing how mortgage guarantee measures help to support and boost housing transactions – and therefore supply.

Every week we see people – from first time buyers to growing families – who see the huge deposits required and simply can’t get a foot on the property ladder. These are the people who will benefit from Help to Buy. While elements of the scheme have recently come under scrutiny – and rightly so – a properly implemented scheme will have a positive effect on the market around us. For us, that means one thing: we can build more homes.

The Government has taken action to try and boost supply of new homes  with planning reform and policies like public land disposal. But without a corresponding increase in effective demand those homes will not get built. If buyers cannot buy, builders cannot build and the recovery will be postponed. As a small builder, I'm hopeful that Help to Buy will deliver the transformation it offers. Of course only time can tell. But the signs are promising. 


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