Controversy has risen once again over the Help to Buy scheme, as past Chancellors have spoken out against Osborne’s Help to Buy scheme.
Alistair Darling, Lord Lamont and Lord Lawson, all of whom are Osborne’s predecessors, have all spoken out, worried at the effect the scheme will have on the housing market.
Osborne’s scheme enables lenders to give out 95% loan to value mortgages, so that potential buyers need only a 5% deposit. It does this either by lending an equity loan to the buyer, or by guaranteeing to pay out the outstanding loan to a lender should the borrower be unable to keep up payments.
The fear comes from the fact that Help to Buy can greatly boost demand for housing, but there is no way to quickly increase supply, as building houses takes time. This means that the prices on the available houses will rocket, and possibly stagnate the market.
The OECD, the economic think tank, has said that “tighter access” to the scheme should be considered, due to the potentially massive house price inflation.
The increase in house prices could cause trouble for the economy, and put it in a similar position that it was back in 2008, experts warn.
Osborne however is so far unrelenting on his scheme, and is continuing to make it available.
