Is the help to buy scheme creating a false market in the UK property sector?

[Longterminvestor]

There is no doubt that the help to buy scheme has assisted many people looking to climb onto the property ladder. However, has it created a false market in the UK property sector? Is it time to set the market loose?

 

[nmb]

The proof will be in the pudding - once the scheme is withdrawn, market movements will tell us if it was a false market

 

[Longterminvestor]

There is a train of thought that by the time the help to buy scheme is axed there will be enough new natural support for the market to ensure prices do not fall back - well at least not too far.

 

[nmb]

You could also argue that any property market is "false" because the UK government/Bank of England control spending on housing and the rather crude monetary instrument which is base rates.

 

[kchiggs]

NO more than the right-to-buy does, afterall without that there would be more demand for private housing to be built.

 

[realdeals]

You have to wonder at what level the average house price in the UK would be without government interference? In theory, if you argue that house prices are “false” because of a blatant attempt to restrict newbuilds then is the whole UK economy based on a false pretense as well as personal finances?

 

[kchiggs]

Historically when there was non it was three times the average salary. So today at 22,406 median that should translate into around 66,138 so say range between 60k to 80k today.... for a three bed house

 

[realdeals]

The average UK house price, including London, now stands at just over £226,000 according to the land registry. Seems like a fair amount of manipulation of markets over the years?

 

[kchiggs]

Yes although buy to rent landlords with their larger pools of capital are partly responsible. Other countries have much larger taxes on buy to let morgatges and/or higher tax in buy to let landlords (which brings down cost for homeowners) while they would likely complain it's unfair or gov singling them out. It's nine the less an effective strategy for lowering prices. Esp as buy to rent morgatges out a lot of extra capital in the system.

 

[lookinginvest]

Rather than picking individual taxes for the UK property market, if you look at the wider picture the UK is by far and away the most heavily taxed property market in the world. All governments seem to see property investors as cash cows to milk when their budget numbers do not stack up.

 

[kchiggs]

I wasn't looking at any taxes here just income and expenses. There are governments such as Estonia who view property investors as s negative and so try to tax them our of existence. At 96% owner occupier rates they are doing well at the goal chosen. Although that's not quite the same as milking cash cows. Their not as heavily taxed in the wider market due to their method of taxation and owner occupier encouragement. The UK is due to how council tax works and the politics of the country.