David Cameron launches Help to Buy three months early
Next phase starts next week despite house-price bubble fears and doubts about how it will work
DAVID CAMERON has revealed that the government is to launch the second phase of its controversial Help to Buy scheme three months early, despite fears that the scheme risks creating another housing bubble.
On the eve of the Conservative Party conference in Manchester, the Prime Minister announced that three state-backed banks - Nat West, RBS and Halifax - would start offering the taxpayer-subsidised mortgages in just over a week.
The second stage of the scheme, which helps buyers purchase any home worth up to £600,000 with just a five per cent deposit, was not due to be launched until January. However, Cameron told The Sun he is "impatient to help young people get on the housing ladder".
Help to Buy was first launched in April this year, providing first-time home buyers with state-backed loans worth up to 20 per cent of the price of newly built properties. In the first four months after its launch, the scheme subsidised an estimated £1.3bn-worth of house purchases.
However, insurers and real estate providers have pointed out that many of the details of the second phase remain unclear. Angel Mas, from mortgage insurance provider Genworth, told the Daily Telegraph: "It is very surprising that the scheme is being launched without clarity on key points such as the fee and the way in which capital relief [which governs the amount of money banks must hold against each loan] will work."
Vince Cable, the Business Secretary, has said that Help to Buy risks creating a new housing bubble. He recently raised questions about "whether it should come into effect in light of the changing market conditions."
New research from property analysis firm Hometrack found that house prices across the country rose by 0.5 per cent between August and September, the biggest increase since May 2007.
However, Cameron pointed out that house price rises varied dramatically across the UK. Although London and Surrey have seen rises of 10 per cent in the past 12 months, the average rise in the rest of the country has been just 0.8 per cent. "Talk of a housing bubble to people here in Manchester or Salford, and they would literally laugh in your face," he said. ·