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Scotswood in Newcastle upon Tyne was the future of government fixes for British housing shortages, once. It was one of many public housing schemes thrown up between the wars. By the end of the century it was a symbol of urban decline. It has now been renamed the Rise – a development of 1,800 new homes.

And how will owners of the first, Barratt Developments-built houses be financed? Via the first phase of Help to Buy, most likely: a government loan for a fifth of a new-build home’s purchase price. The policy was first meant to run to 2016, when announced last year. It will now go on to 2020. (Phase two, a broader mortgage guarantee, will end in 2016.) Any bets on phase one being made permanent?

After all, any buyers of shares in a British housebuilder in the past three years should already have made peace with the sector trading as a proxy for policy anyway. They were rewarded for the pact: the sector rose 95 per cent during those three years (by contrast the FTSE All-Share rose by a fifth).

The price is quite some reliance on a single subsidy for a sector which trades at two times book value. Almost a third of all newbuilds sold were HtB-funded last year, says Morgan Stanley: 30 per cent of Barratt’s completions came via HtB. Since Britain still builds half as many homes as it should (130,000 last year), HtB will remain a swing factor.

Stickering a 2020 sell-by date on the policy may make the bet more palatable. The scheme is less of a hostage to the 2015 election. More importantly, it moves investment horizons beyond the three to four years needed to take a plot from planning to a finished home. The certainty of half a decade should mean developers tap bloated land banks and buy new sites to build, boosting supply from its lows.

But in the meantime this is still a policy proxy. There is no guidance so far about how HtB’s equity loans might “taper” before 2020. It seems a long way off. But, with housebuilder shares at two times book value, it pays to look ahead.

Email the Lex team in confidence at lex@ft.com

Copyright The Financial Times Limited 2017. All rights reserved.

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