Don’t Knock Help To Buy Says Leading Property Developer Chief Executive

It is easy to forget how useful the Help to Buy scheme has been for property developers in the UK as the flak from critics has rolled in.

The remaining scheme, Help to Buy: Equity Loan alone has driven 211,000 sales worth £11.71 billion between its launch in 2013 and the end of last year, latest government data shows.

And as Dealmakerz has reported before, Help to Buy can drive 60% and even 70% of sales at some new-build developments.

This has prompted property commentators such as Henry Pryor to describe the scheme as the ‘crack cocaine’ of the property development sector, so reliant is it on what most consider to be an indirect government subsidy.

It can also be seen as a form of affordable housing; without the government’s support much newbuilds would be beyond the reach of many if not most home buyers.

One developer with experience in both affordable homes and Help to Buy is Mizen, run by Barry Tansey – the son of founder Bernard Tansey – along with his brother Alan.

Affordable roots

The company has its roots in affordable housing since starting up during the late 1980s but, like many builders who construct newbuild homes in London and the South East, it relies heavily on Help to Buy.

Its Chief Executive Barry Tansey says Help to Buy has been particularly important as the capital’s housing market has become tougher.

Mizen – At a glance…

  • Started life in 1986, founded by Bernard Tansey, who is now its chairman.
  • It is now run by his son, who says the firm is best described as a mixed-tenure but largely residential let developer building 200-250 units a year.
  • Development size varies from ten to 74 units. Typical scheme size is 40-50 units.
  • Started life as an early niche builder of affordable housing at a time when larger builders weren’t involved in the sector.
  • Diversified during the mid-1990s into the private residential let housing market.
  • Company continues working with housing associations and also developing its own sites, which are mainly apartment blocks in London, and houses outside.
  • Residential is its core business but it also builds commercial when developing mixed-use sites.

“Although it’s more difficult to find buyers in London, there are still pockets and areas that still provide good opportunities for developers and home buyers alike,” he says.

“These tend to be neglected areas next to good transport infrastructure and one area that springs to mind is Hounslow; it’s on the Piccadilly Line and we’ve just finished a scheme up there.

“I think as long as your product is priced well then London is fine, but Help to Buy has been a great supporter of our market and we keep our product aligned to the maximum ticket size to fit in with that.”

Too dependent?

But does Barry agree with the critics who say too many builders of all sizes have become dependent on the government’s support for the market and in particular first time buyers?

“There are some people who take that view, but I take a different view which is that either we have a housing crisis or we don’t,” says Barry.

“If there is an opportunity to enable people to buy a new home and get on the housing ladder then that’s got to be a good thing.

“I know lots of people have been condemning Help to Buy and wanting the government to call time on it, and there have been problems with it including some abuse, such as recent examples of relatively wealthy people accessing it.

“With every market there’s abuse, but overall the greater good has come through.

“A lot of the properties we’ve sold including most recently in Hounslow, where two-bedroom flats were £350-360,000, were bought by people who were pushing themselves to the limit of what they could afford, and not abusing the system.

Time will tell

“I think in general it has been a good thing for the market, but whether it’s a bad thing that such a high proportion of sales at some developments come from it, time will tell.

“I don’t think it will do, though, because the scheme was designed to get people on to the housing ladder, move up it, and gain equity.

“If Help to Buy wasn’t there then realistically most of these people would have remained in rented accommodation and not developed an equity base.

“I don’t think that after five years everyone who’s bought with Help to Buy will suddenly sell up and flood the market, as some people have predicted, although it will be interesting to see how the government eventually unwinds Help to Buy.”

Investor collapse

It’s clear to see why developers such as Mizen Properties need the scheme. Barry says the investor market has all but collapsed except for corporates block-buying 10 or 20 properties at a time, no doubt at significant discounts.

The company also says the ongoing Brexit saga has made selling properties more difficult, with or without government help

“The last three years of Brexit debacle has not helped the market because it’s made some people feel insecure about probably the biggest purchase they will make in their life,” says Barry.

“If people have any doubt about the market and falling off the edge of a cliff when we leave the European Union they are unlikely to risk their savings to buy a home.

“It has definitely made the mid-market difficult although it’s had an effect across the board.”

Mizen Properties has time to recover from a hard-Brexit induced recession, should it happen after October 31st.

The government has committed to support Help to Buy until 2023 and the new Secretary of Housing, Robert Jenrick, last month hinted heavily that the scheme may be extended.

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