Chancellor George Osborne’s Help to Buy scheme has been criticised by the Business Secretary, Vince Cable, on BBC1’s Andrew Marr Show.
The plan to underwrite mortgages to the tune of £130bn – with the taxpayer as the guarantor of 15 per cent of each loan – could “inflate the market”, and make it even more unaffordable for families and couples seeking their first home, said Cable. The scheme also enables buyers to lay down a 5% deposit, instead of the much larger deposits usually required by banks.
Chancellor Osborne said the Help to Buy scheme was “about getting behind those who aspire to own a home”.
Alongside politicians, some experts within banking and the property market have also been critical of Osborne’s plan, such as Sir Mervyn King, the former Governor of the Bank of England.
The Institute of Directors also questioned the wisdom of Help to Buy, calling it “very dangerous”. Its chief economist Graeme Leach said, “They will drive up prices when it seems likely that house prices are already over-valued.”
However, a resurgence in the property market will exonerate the Coalition’s policies in the eyes of some. As many of our unoccupied property insurance customers will attest, interest has picked up in a previously rather stagnant market. 120,000 first time buyers successfully got on to the property ladder in the first six months of 2013, according to a recent report by the Halifax. The figure is the highest for six years since a peak of 181,500 in 2007, just before the financial crisis.