Help to Buy – Wales

Finding myself at a loose end I did what I often do to ward off ennui – I delved into StatsWales, a site I recommend to anyone with a strong stomach who is free from high blood pressure or problems with their cholesterol levels.

Once there, and presented with a choice of options, I first went for ‘Housing’ and then the sub-heading ‘Help to Buy’. Then I was presented with a number of tables giving facts and figures for this scheme. For those unfamiliar with Help to Buy – Wales here’s a link to the ‘Welsh’ Government’s sooper-dooper new-style website where all is explained.

And here’s a link to the Buyer’s Guide. In a nutshell; you need to come up with 5% deposit, 75% mortgage, and then you apply for a 20% equity loan from Help to Buy – Wales to complete the purchase of a new-build home. It’s basically a programme to stimulate the building industry.

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Going through the various tables, and making comparisons, certain anomalies began to appear, anomalies which, when I gave them some thought, were rather worrying, for it was difficult to think of an acceptable or innocent explanation for some of the curious data confronting me.

So let’s go through some of the figures provided and start with the headline figure that tells us 7,402 Help to Buy purchases have been completed.

The next table ‘Help to Buy – Wales completed purchases by local authority and date’ gives us a breakdown by local authority for that 7,402 figure, and it’s now that the anomalies begin to emerge. (You’ll need to click on the ‘Full Screen’ icon at the top of the page to view the full table.)

Diving in . . . why have there been 1,339 completions in Newport (population 151,485, 2017 mid-year estimate) but only 326 in Cardiff (362,756, ditto)? Or why should there have been 768 completions in Flintshire (155,155) but only 205 in neighbouring Wrexham (135,571)? Moving to the south west we see that Carmarthenshire (186,452) completed 645 while in neighbouring Pembrokeshire (124,711) it was just 191, while up the road in Ceredigion (73,076) it was a measly 21!

Moving down the list, a table I found very interesting was the one dealing with house prices, which is worth spending some time on because it raises more questions about the workings of the Help to Buy system. Let me explain what I mean.

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Earlier we noted that there were many more properties bought with Help to Buy in Carmarthenshire than in Pembrokeshire and Ceredigion combined. The table suggests that this may be due to most of the properties sold in Carmarthenshire being under £150,000, which would suggest that there the scheme has been used to help first-time buyers, who reassuringly made up 80% of sales, one of the highest percentages in the country. By comparison, the first-time buyer figure for Torfaen was just 59%.

The figures for Merthyr I find very strange. Without wishing to do the area down, I was surprised to see that 68% of the Help to Buy properties there were priced at over £150,000. For Carmarthenshire – where property values are higher than Merthyr – the figure was just 24%. The figure for Swansea is 25%, and for Blaenau Gwent, the other Heads of the Valleys authority, it’s 22%.

So why are people buying such expensive houses in one of the poorest areas of a poor country?

For most areas – even Merthyr – there is a tailing off as we approach the £300,000 limit, which is to be expected. Yet in the following local authority areas the top price bracket shows an increase in completions over the cheaper band preceding it: Conwy, Denbighshire, Flintshire, Wrexham, Vale of Glamorgan, Cardiff, Torfaen.

For Flintshire, the figures are striking: 99 completions in the £200,001-£225,000 bracket, 105 in the £225,001-£250,000 band, and then a leap to 150 in the top £250,001-£300,000 band. Which means that 89% of the properties bought in Flintshire using Help to Buy were priced at over £150,000.

According to the Land Registry, the average house price in Flintshire in June 2017 was £162,703 (and has since dropped). For Merthyr the figure was £98,172. The figures for all local authority areas are available here, scroll down.

In the hope of pulling everything together I decided to compile a table of my own. (Available here in pdf format.) The columns show, from the left:

  1. The local authority.
  2. The area’s population from the ONS’ mid-year estimate for 2017.
  3. A breakdown of the prices of properties bought with Help to Buy (split into four bands rather than the eight supplied by StatsWales).
  4. The total number of Help to Buy completions.
  5. The number and percentage of first-time buyers.
  6. The average house price for each area in June 2017, supplied by the Land Registry.
  7. The average price paid for a Help to Buy property.
  8. The difference between 6 and 7.
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So in addition to the questions already posed, why have there been so many Help to Buy purchases in some areas and so few in others? As mentioned, the most obvious stand-out is Newport, which with 4.8% of the population accounts for 18.7% of the Help to Buy completions.

Could it be that many, or most, of the Help to Buy purchases in Newport are investments in anticipation of the expected influx of Bristol commuters? Come to that, are many of these properties being bought by Bristol buyers thinking ahead? It’s difficult to explain the Newport anomaly without bringing Bristol into the equation.

But whatever the explanation, isn’t Newport taking up a disproportionate amount of the £170m available? Is there no mechanism to ensure that all parts of the country are treated fairly?

As for Flintshire, we can reasonably assume that many of the buyers there will have come from over the border, which points up another serious shortcoming in Help to Buy.

It would be nice to think that this scheme focuses on first-time buyers, local young people buying their first home. We have the excellent example set by the three south western counties but elsewhere the picture is patchy. With 83% of Help to Buy sales in Wrecsam and Cardiff being made to first-time buyers but just 59% in Torfaen, Newport’s hinterland.

Carmarthenshire also deserves praise for the fact that 76% of the properties sold in the county with Help to Buy were priced at £175,000 or under. Which when coupled with an 80% first-time buyer figure suggests that it’s young locals being helped.

You’ll notice that in three local authorities – Vale of Glamorgan, Pembrokeshire, Monmouthshire – the average Help to Buy price is lower than the average sale price for those areas. But Monmouthshire and the Vale have the highest property values in Wales so this is nothing to worry about. While for Pembrokeshire we see that 77% of the Help to Buy properties were £175,000 or less which, when coupled with an 85% first-time buyer rate, suggest that it’s on the same righteous path as next-door Carmarthenshire.

Though I’d like an explanation for why there have been so few Help to Buy sales in Ceredigion. (And I don’t want any Cardi jokes!)

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And then there’s Merthyr. I can think of no good reason why most of the properties bought there with Help to Buy were priced over £175,000 when the average house price is £98,172. And why are only 67% of them first-time buyers? Somebody’s taking the piss.

Administered properly Help to Buy could have done a lot of good. If it had been limited to first-time buyers and those who had lived in Wales for a minimum of five years. But because the impetus was to build more houses, and because the more expensive the house the bigger the profit margin, ‘anomalies’ were guaranteed.

So you have to wonder who was responsible for putting this programme in place, and vetting the various participants. For when we look at the participating lenders we find the Darlington Building Society, with just four branches, all in North Yorkshire. Or the Chorley Building Society, with three branches, all in Lancashire.

When we look at the list of participating builders we see a long list of companies, a list that contains quite a few outfits that I bet have never laid a brick in Wales.

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Going back to the ‘Welsh’ Government website, those thinking of using Help to Buy are also advised to find, in addition to a builder and a lender, an approved financial advisor and an accredited conveyancer. Clicking on the links for these brings up the same long list of professionals, and again, many of them are outside of Wales. Bristol and Chester seem popular locations. (List available here in pdf format.)

As I say, properly applied and administered Help to Buy could have helped a lot of our people, and given a boost to Welsh companies, but like most legislation that passes through Cardiff docks and then into the hands of civil servants it is intended that as much as possible of the benefits spread over the border.

And inevitably, there will be some jiggery-pokery, as alliances are forged between builders, solicitors and lenders. Other may be drawn in, such as local government officials and councillors. Also, friends and family of those involved will be ‘helped’ to apply for Help to Buy.

Standing back, looking at the big picture, one thing becomes clear. By and large, the Help to Buy programme seems to have been implemented more sensibly, more fairly, and less wastefully, in those local government areas that are not controlled by the Labour Party.

Make of that what you will.

♦ end ♦

 

12 thoughts on “Help to Buy – Wales

  1. Wynne

    Well done Jac. Well researched post . Thanks for highlighting the issues and again drawing the matter to the attention of a wider audience in Wales. I sometimes wonder whether any government official examines, and tries to interpret as you have done, the large amount of data collated by Welsh Government. Has anyone in government asked the obvious questions a] how does this scheme benefit Wales an b] is the scheme delivering value for money. I would be surprised if Welsh Government officials are actively monitoring this scheme. They are probably relying on registered developers ticking the appropriate boxes on application forms while overseeing the process but without checking on any detail, or am I being cynical. After reading guidance documents on the scheme to understand the process I recently requested information under the FOI Act. Recent exchange of email correspondence is copied below from my records. I leave it your readers to draw their own conclusions from the exchange of information.

    Good Morning Wynne,
    At the start of the scheme, we did collect this forecast data, but it was soon realised that it was not accurate and Developers were over forecasting, so we changed the Providers Administration Deed (Contract with the Developer) when we did an earlier Deed of Variation to state that the Fund would be allocated on a first come first served basis, i.e. committed upon us giving our Authority to Proceed, so forecast data is no longer collated by HTBW;

    Please see Stats Wales for HTBW scheme data that is publicly available https://statswales.gov.wales/Catalogue/Housing/Help-To-Buy

    If you would like us to continue with your FOI request please advise us,
    Best Regards
    Cath

    From: minyrafon@btinternet.com minyrafon@btinternet.com
    Sent: 17 September 2018 17:15
    To: Catherine Lewis-Jones cath.lewisjones@helptobuywales.co.uk
    Subject: Re: Help to Buy – Wales Scheme – General Enquiry

    To: Help to Buy [Wales] Ltd – Fund Manager – Catherine Lewis-Jones

    Thank you for your prompt reply. The enquiry was directed to you as I have previously been advised by Nick Hampshire [Ateb Group CEO] that enquiries should be directed to Welsh Government [as R S L regulator].

    Help to Buy [Wales] Ltd administers the Help to Buy – Wales fund on behalf of Welsh Government. The information requested is required in connection with an ongoing investigation. As the request for information relates to the administration of public funds allocated by Welsh Government I would not expect Mill Bay Homes Ltd [a private company] to be in a position to instruct you to withhold the information. It is not clear to me why information regarding the administration of public funds is considered to be commercially sensitive. As I previously indicated any personal data can be redacted if you consider it appropriate. I trust this helps to clarify the position.

    I look forward to receiving the information at your convenience.

    Regards
    Wynne Jones

    On 17/09/2018 15:39, Catherine Lewis-Jones wrote:
    Good Afternoon Wynne,
    Can I please enquire why you are requesting this information, is this something that you could approach Mill Bay Homes directly for? As it is commercially sensitive information I would not be able to pass this on to you without their permission,

    Best Regards
    Catherine Lewis-Jones
    Fund Manager
    Help to Buy Wales
    T: 08000 937 937 F: 02920 803451
    E: enquiries@helptobuywales.co.uk

    From: minyrafon@btinternet.com minyrafon@btinternet.com
    Sent: 16 September 2018 10:54
    To: builders builders@helptobuywales.co.uk
    Subject: Help to Buy – Wales Scheme – General Enquiry

    To: Help to Buy [Wales] Ltd

    I understand Help to Buy [Wales] Ltd administers the Help to Buy – Wales scheme on behalf of Welsh Government. I note, from the attached developer participation guide, the requirement for registered providers to provide you with proposed forecast sales by post code and local authority area and estimated market value, with sales forecast provided for every quarter until end of December 2021. The quarterly monitoring information to include: progress against forecasts, enquiries, reservations and sales achieved.

    Mill Bay Homes Ltd is a registered provider under the scheme. I would be grateful if you could arrange to provide me with a copy of the latest monitoring report presented to you by Mill Bay Homes Ltd. If you require the request for information to be made under the Freedom of Information Act 2000 please advise, otherwise I look forward to receiving the information at your earliest convenience. Any personal data can be redacted, if you consider it appropriate, to comply with the data management principles set out in Schedule 1 of Data Protection Act 1998. Thank you.

    Regards
    Wynne Jones

    1. As we both know, Wynne, from hard experience gained over many years, the civil servants supposedly running schemes such as Help to Buy don’t know what’s happening. A programme is – like some wild creature – conceived and in a very short time left to fend for itself, with the ‘parent’ civil servants relying almost entirely on information from others as to the well-being of the offspring.

      These reports come from those implementing the various schemes who obviously have certain interests, among which are screwing the maximum amount of public funding from the ‘Welsh’ Government and other sources, and making out that they are doing a wonderful job so that funding keeps flowing.

      One widely used term to describe this practise is ‘box-ticking’, and it’s widespread because it serves everybody’s interests – politicians, civil servants, and recipients of funding. The losers are the rest of us. And Wales.

      A few days ago we were discussing the Development Bank of Wales, and just before reading your comment I received an e-mail telling me of Dic Mortimer’s latest piece, in which he laments the disappearing pubs of Cardiff, something that clearly exercises him because he writes on the subject regularly.

      The article begins,
      “29 PARK PLACE
      Park Place
      It’s getting hard to keep track of the catalogue of failed ventures at this lovely 1874 townhouse close to the National Museum. This effort by local company Croesy Bars lasted 2½ years. It opened thanks to a £160k loan from the Welsh government via its Development Bank of Wales subsidiary and shut with debts of over £¼million, including to the council and various food suppliers (subsequently it’s been taken over by Knife & Fork Food and added to their stable of ho-hum gastropubs that includes the Conway in Pontcanna and the Discovery in Cyncoed). Croesy Bars owner Jon Saunders, ex Mitchells & Butlers general manager and responsible for the Ten Mill Lane cocktail bar, can now concentrate on another of his, um, undertakings: the Dead Canary in Barrack Lane (see Bar Icon below), a snobby ‘speakeasy’ where cocktails are £10 a hit. The question is this: why does the Labour government dish out scarce funds willy-nilly to prop up otherwise untenable speculative drinking establishments in a city centre which has over 320 licensed premises already? Possible answers include: to create a couple of jobs pulling pints, heating up bar snacks and scouring toilets; to hasten Cardiff’s transformation into a drizzly sub-Magaluf on the Taff; to encourage the creation of a numbed, passive, compliant population; or perhaps to paper over the cracks of their clueless inability to tackle Wales’ profound economic malaise. I have a supplementary second question: can everybody in Wales get such generous unconditional backing? You see, I could really do with £100k to complete, publish and distribute an important in-depth investigation and exposure of the corrupt crooks and criminals who are destroying Wales.”

      More and more people can see the problem of money being squandered on projects that serve no purpose beyond box-ticking. It is a national disease.

  2. Eos Pengwern

    The whole philosophy of Help to Buy is fundamentally flawed, and shows the hollow lack of understanding of basic economics that has afflicted the last two Tory chancellors. At a time when the basic problem with the housing market is too much demand and too little supply, the geniuses in no. 11 Downing Street came up with a scheme to stimulate demand.

    It’s such a bad idea that it’s bound to have all sorts of bad outcomes, and if Labour councils in Wales are essentially using it to import people from areas over the border where house prices are higher than they are in Wales, then that’s not at all surprising.

    Even so,it takes someone like Jac to take the trouble to check the figures, and unlike Wynne I’m afraid it wouldn’t have occurred to me to peer into this particular dark corner of our economy.

    1. Certainly, in Newport, Torfaen, and Deeside, we can be reasonably sure that many of those claiming Help to Buy from the Welsh allocation are coming from over the border.
      But then there’s Merthyr, where Help to Buy has been given for the purchase of detached four-bedroom houses. This, I suspect, is good old-fashioned Valleys Labour corruption, with perhaps a dash of nepotism.

    2. Brychan

      The original ‘Help to Buy’ scheme was introduced by the Westminster House to address the issue of ‘essential workforce’ like firemen, nurses, police officers in London currently being unable to afford property in the metropolitan area. It required primary legislation and a chunk of government debt allocated to it, for England.

      In order to prevent the ‘Barnet Consequential’ being handed over to Scotland and Wales the legislation was designed so that it could only be accessed through similar schemes launched by the devolved administrations. This is how ‘Help to Buy – Wales’ came into existence.

      The reality is that, in Wales, there is a specific over-inflated property bubble and it’s in Cardiff. However, the solution to this is the valleys. Anyone who can’t afford a Cardiff price should buy in the valleys and commute, which is considerably cheaper, and would bring sub-standard housing into use and re-generate the valleys. The money should be invested in new, longer commuter trains, and redesign Gaer Junction instead of subsidising over inflated Cardiff property prices.

      Either by design or corruption, the scheme has been used as a colonial mechanism to import by subsidy English people from Avon and Cheshire into the eastern counties of Wales and also a method for English controlled Housing Associations to use their property building ventures, making profits from new-build holiday homes in rural areas.

      It’s bad for – the valleys, the Cardiff poor, rural Wales, and is an assault on the communities and identity of those along the border. Thing is Plaid Cymru supports it., and the Labour Party fill their boots. If there was any scheme cooked up by the Welsh Government that’s not needed and an assault on all areas of Wales, then this is it.

      There’s terraced housing in the valleys going for peanuts while the town centres are dying. It’s creating ghettos of poverty. All to subsidise Cardiff developers, holiday homes in Pembrokeshire, and importing the English commuter posh turning Wrexham and Newport into dormitories for Cheshire and Bristol.

      1. Wrexhamian

        Brychan, the English commuter posh don’t target Wrecsam but the surrounding villages which have in turn been targeted by the Planning Inspectorate for excessive housebuilding, as have the Flintshire villages just west of Deeside. Common sense suggests that you and Jac are probably right in implying that Help to Buy-Wales is partly to blame, and the villages are bearing the brunt of it.

        As we all know, whatever cost-bracket a property falls in, the local Welsh are generally less likely to get it because Wales is poorer and there are few proper home-grown jobs. That’s why Powys house-sales at the expensive end go to what Carwyn Jones recently described euphemistically as “people with more money coming from ‘elsewhere'”. Help to Buy – Wales can’t prevent this as long as it’s thrown open to all comers from both sides of the border.

        The result in Flintshire has been a 6.2% fall in the percentage of Welsh speakers. Wrecsam, however, has a higher Welsh language profile than ever, and is enjoying an increase in the number of Cymraeg-speakers – an increase mirrored in every Welsh county except beleaguered Flintshire. It’s the one note of optimism in what would otherwise be a desperate situation for Welsh culture and identity.

    3. Dafis

      Eos, bullseye with that point.

      In the country, UK wide, where poor supply has been the prevalent problem for years successive governments, UK & Wales, have introduced measures to boost/support demand. So we say WTF ?

      Well, inflating house prices is a core “feelgood factor” among the homeowning herd ( me included ! ) but I’ve had recent experience with my 2 “kids” (both c.40) struggling like hell to find homes at a price they can fund. We cracked that one mainly by virtue of deposits inherited from a gran, but I see young families around here who are holding down multiple jobs just to pay some inflated rent on a 2 bed house which they should have been able to buy.

      The solution is so simple – build like hell in areas of genuine need using public funds if necessary. Influx of tidy new properties will burst the rental bubble ( especially in parts of England and more “busy” areas of Wales ) In that situation prop up those transitioning from rent to 1st time ownership with a sensible regional cap thus shutting out the more obvious grant grabbing element.

      Of course it will need public servants with a modicum of real world skills to make sure some smart deviant doesn’t work out a new angle or fiddle.

  3. Wynne

    In addition to the “Help to Buy – Wales” scheme the “Shared Ownership – Wales” scheme may also merit close scrutiny and possibly a separate post by you Jac. This shared ownership leasehold scheme is only available to R S Ls who are the “landlords” under the scheme and own the freehold with the purchaser paying rent + mortgage. So why is a leasehold scheme being promoted at a time when Welsh Government have indicated a change in policy. As I understand it, on 6 March 2018, Rebecca Evans A M Minister for Housing and Regeneration announced changes, summarised below.

    • Leasehold will not apply to new build other than under very specific circumstances
    • Voluntary agreement with major developers [including Bellway, Redrow, Taylor Wimpy, Barratt Homes and Persimmon] that they will no longer offer houses for sale on a leasehold basis unless it is absolutely necessary.
    • New criteria for Help-to-Buy – Wales.
    • Developer to present genuine reason for a house to be marketed as leasehold.
    • New lease agreement for houses and flats will have to comply with new minimum standards, as under
    • limiting the starting ground rent to a maximum of 0.1% of the property’s sale value
    • any future increase in ground rent linked to RPI
    • leases to run for a minimum of 125 years for flats and 250 years for houses
    • legal obligation on house builders offering houses for sale under Help to Buy – Wales to meet these new conditions.
    • Help to Buy – Wales “Conveyancer Accreditation Scheme”. National standards. Training delivered by Help to Buy – Wales.

  4. Dafis

    Paul Davies, leader of Tories in Wales, wasted no time in responding to Price’s elevation at Plaid. His message according to Llaisysais reads –

    “I congratulate Adam Price on being elected as the leader of Plaid Cymru, and look forward to working with him in the Assembly on areas of common interest. I hope that Adam realises that Plaid members have now signalled a new direction. This is a clear instruction to end Welsh Labour rule and that they should no longer prop them up.
    I have been consistently clear in not taking anything off the table when it comes to putting the Welsh Conservatives in government because my priority and mission is to provide a real, genuine alternative to this failing Welsh Labour administration, and change Wales for the better.”

    I like the bit about slinging out Welsh Labour by whatever means, however the Tories have a history of wanting things done their way and this prospective marriage of convenience could have a very short lifespan. Bit like us guys aligning with Anglo Brexiteers just to get the deed done but not wanting anything to do with the greedy supremacist bastards after the event.

    Still moving Ms Wood on makes life a touch more interesting for now. I still have a sneaky feeling she’ll end up in the Labour party especially if Corbyn or one of his mates hangs on to the leadership in London.

  5. Gwilym ab Ioan

    It’s my impression that Leanne Wood would be far more comfortable in a Corbyn led Labour party than in Plaid Cymru, because to the socialists in Plaid their nest is spoiled there by some stubborn ‘Nashies’ who are still more nationalist that socialist.

    Leanne is actually a Socialist with nationalist sympathies, rather than a Nationalist with socialist sympathies. There’s a big difference. She would feel far more at home in Corbyn’s camp. After all it’s what she’s been brought up with in Penygraig in the Rhondda. The only thing that would hold her back is egg on the face on her own doorstep.

    Now we have another little Socialist in the guise of Pricey boy. The revealing fact is, when asked on a Welsh hustings programme – at the end of the debate – the interviewer asked each candidate if they considered themselves to be socialist or nationalist. Leanne and Adam answered socialist with only Rhun saying that he was a nationalist – says it all really.

    Now go and ask ANY Ein Gwlad member what they are, and guess what the answer would be.

    1. Brychan

      It’s not possible to be a socialist in a colony without being a nationalist. Bringing about a socialist society by means of the colonial government just subverts the colony under a different type of state. The reality is that there are few, if not any, socialists in the Labour Party in Wales because they support the British state. This is why, despite voting Labour in the valleys for the best part of 100years, the people of the valleys are are poorer. I actually think Leanne understands this. Prosperity in the Rhondda can only come from the national self determination.

      Will Adam Price re-instate Sean Rees, Gwyn Hopkins and Neil McEvoy?

      1. Dafis

        Reinstating dissenters ? Not bloody likely ! Bringing them back into the fold would show great sense but it would serve to alienate that mixed bag of issue-driven sensitive souls ( especially in the case of McEvoy). Showing Ms Arthur the door could be another wise move but she too is aligned to an assortment of fantasists for whom the realpolitik of an independence struggle is alien matter. Still all good for Ein Gwlad ! I don’t think Mr Price’s elevation will interfere with membership enrolement and supporter figures for the new party.

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