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Panorama’s House Price Bubble – Full of Hot Air!

Will the Government’s new Help to Buy scheme cause a housing bubble? This was the question posed on last night’s BBC Panorama on prime time TV.

Who knows what effect this will have. In a recent survey by the property investors network, we asked this question and 16.9% of people said there would be a significant increase in prices whilst 20.1% believed it would create a bubble.

The Government has clearly introduced the Help to Buy Scheme as a much needed stimulant to the property market.  There is no doubt that the property market has picked up in the past few months but what is the reality of the Help to Buy Scheme?

There are two reason people will struggle to get on the housing ladder. The first is the difficulty in raising a deposit and the second is the inability to get or to afford a mortgage. Whilst Help to Buy will help the first group of First time Buyers, it will not help those who are unable to get a mortgage at the moment.


The BBC Panorama programme pointed out that even if some people could afford to find the 5% deposit, they still may not be able to afford the mortgage. Thank goodness for us landlords who provide good quality affordable accommodation to people who can’t afford to buy. It also raised the concern that

people who use the Help to Buy Scheme may not be able to afford their mortgages when the Bank of England base rate increases from the current 0.5% to something like 4.5%. However, this will not be an exclusive problem for First Time Buyers. Many property investors will also be in trouble when interest rates rise!

Boom or bust is not good for anyone but steady increase in house prices is not only a good thing but is also inevitable given that in the UK, we live on an island with limited amount of accommodation and an increasing population. House prices will steadily increase even if only in line with inflation.

It is in everyone’s interest that property prices rise over the long term especially the banks who have huge amounts of lending secured against property, and the general public whose money (in the form of taxes) was used to bail out the banks in the aftermath of the credit crunch.

However, there were some experts on the BBC Panorama programme who suggested that the only way to solve the housing problem was for house prices to come down.  How ridiculous is that? If that were the case private investors would not buy property to rent out and there really would be a shortage of accommodation for people who are not able to purchase.

One of the problems with renting, stated on the BBC Panorama programme was the instability of families who rent, as the landlord could after six months give them notice that they have to move. By having their own home the owners can put down their roots and settle into the property and the local community.

There is an alternative solution to this for people who are desperate to get onto the housing ladder but can’t get a mortgage or cant afford a mortgage right now. That is a solution called Rent to Buy, where the tenant can get their foot on the property ladder by locking in a price at which they can buy the property at some time in the future. This gives them time to save enough deposit, and improve their ability to obtain a mortgage whilst enjoying the benefits of home ownership. More details on rent to buy here.

Why does it seem that these BBC programmes always have a hidden agenda? What are your thoughts?

Kind regards,


Simon Zutshi

Author: Property Magic:

Founder, property investors network