Think tank calls for Help to Buy to be abandoned

Think tank calls for Help to Buy to be abandoned

Think tank the Adam Smith Institute has called for ministers to abandon Help to Buy.

Instead, it wants to see other initiatives – in particular, the jettisoning of mandatory affordable housing obligations, which developers say can cost them so much that schemes become unviable.

The Adam Smith Institute has spoken out after concerns mount over the two-part scheme, while mortgage brokers and lenders have warned ministers that Help to Buy could send house prices soaring.

The Intermediary Mortgage Lenders Association is forecasting a house price bubble.

Its research shows that two-thirds of lenders and brokers believe house prices will be artificially inflated.

The first phase of the Help to Buy scheme, which offers buyers of new-build properties only an interest-free five-year loan for 20% of the property’s value, was launched in April.

The second phase, launching in January, will offer £12bn of mortgage guarantees for buyers with only a 5% deposit, and will be open to purchasers of both new and old stock.

In both cases, the scheme is available to buy properties worth up to £600,000.