If "aspiration nation" was the ugliest sound bite in George Osborne's 2013 Budget, "Help to Buy" - a less assonant version of Thatcher's epochal Right to Buy - came a close second. Designed to cement the Tories' traditional position as the champion of home-ownership, the new scheme should help wealthier first-time buyers and housebuilders without increasing the deficit.
Help to Buy has two elements. First, it extends FirstBuy, an initiative announced in mid-2011, by offering £3.5bn worth of interest-free 'equity loans' for those who want to buy a new home but cannot muster up a 20 per cent deposit. Whereas FirstBuy was limited to households with income under £60,000 and houses costing up to £280,000, Help to Buy is for everyone and will stretch to £600,000 homes. It should boost the housebuilders, for which FirstBuy and the less popular NewBuy scheme now account for about a quarter of sales. Shares in Persimmon (PSN) rose 5 per cent; Taylor Wimpey's (TW) stock was up 6 per cent.
The second element of Help to Buy introduces £12bn of lender guarantees for high loan-to-value mortgages. If it works, this will make it cheaper for banks to lend to first-time buyers - a cohort they are otherwise under regulatory pressure to avoid. The scheme is potentially meaningful for companies that rely on housing turnover, like the newly refloated Countrywide estate agency group (see p15), as it covers the much larger market in second-hand homes. But, for the same reason, it won't help the construction sector.
Whether Help to Buy will reverse the national trend away from owner-occupation remains to be seen. The chancellor is in any case hedging his bets with a measure to boost the private rented sector. The £200m Build to Rent fund announced in last year's Autumn Statement, which he reports was "significantly oversubscribed", will be expanded to £1bn.
The reason Mr Osborne can afford this largesse is that these loans require cash and increase the national debt but, for mysterious accounting reasons, have no impact on the more closely watched Public Sector Net Borrowing figure.
