Budget: Help to Buy homes plan causes confusion

By JAMES TAPSFIELD
Published on 22/03/2013 01:10

The government’s mortgage guarantee scheme was plunged into confusion last night amid claims it could be used to buy second homes.

During a lunchtime interview, housing minister Mark Prisk flatly denied the initiative could be exploited by people purchasing extra properties. .

He insisted applicants would have to provide a legal undertaking that they had sold their existing home.

However, within hours Treasury sources were clarifying the remarks, suggesting Mr Prisk had only been referring to the “equity loan” element of the Help to Buy scheme announced in this week’s Budget.

The government is still working out details of the mortgage guarantee element with the industry before it launches next January, they added.

The mixed messages came after George Osborne repeatedly ducked the issue in a tour of television and radio studios following his Budget.

The Chancellor was also hit with warnings from Labour and the Tory back-benches that the £12 billion policy would merely drive up house prices rather than kick-start construction.

The “equity loan” part of Help to Buy is an extension of the existing First Buy scheme. New or existing homeowners will need to raise a deposit of 5 per cent of the value of the property they want to buy, but can borrow a further 20 per cent from the government on an interest-free basis. The biggest loan will be £120,000.

The mortgage guarantee element will be available for all types of housing stock from January. The government will guarantee up to 15 per cent of a mortgage, allowing people with 5 per cent deposits access to lending.

Speaking on Radio 4’s World at One, Mr Prisk stated: “Ed Balls [the shadow chancellor] is claiming you can get a loan under the Help to Buy scheme for your second home,” he said. “Let’s be clear, that is not the case. This is about family homes. It is not about second homes.”

Mr Balls had contrasted the policy with plans to reduce housing benefit for families with spare rooms. “The government is basically saying that if you’ve got a spare room in a social home you’ll have to pay the bedroom tax, but if you want a spare home we’ll help you buy one,” he said.

TIMETABLE

7am - George Osborne unable to say if scheme will help fund second homes.

11am - Lib Dem Danny Alexander says the details “are being consulted on”.

1:30pm - Housing minister Mark Prisk says the scheme is not for second homes.

4pm - Vince Cable says the scheme is still in its “development stage”.