It was a lucky coincidence that my last blog post was updated on Budget Day. While I offered a personal perspective on the trials of renting through a real estate bubble, the Chancellor added some more fire to the bubble: One of the big announcements was that the treasury will chip in £50 for every £200 saved for a first time ISA destined to buy a house.
Of course it is a popular measure before an election, one that will be sold as an incentive on saving. A more accurate description would be a rent transfer from taxpayers to landowners and real estate agents through middle class’ off springs fortunate enough to buy. A less cautious description would be to define it as an outright electoral bribe. It is not the first time that the Chancellor has pulled this move, remember “Help to buy” a policy with a similar aim: subsidize landowners through “aspiring” middle classes. Not so long ago, when housing prices seemed to cool down, his autumn statement promised a stamp duty reform. It is not the first time a chancellor has done this: the roots of the UK housing crisis can be traced to Thatcher’s “Right to buy”. Neither are English chancellors alone in promoting housing bubbles, Spanish ministers spent most of the last decade in trying to flame is own housing bubble.