Government Help

Help to Buy could be ‘hazard to economy’ – Taylor Wimpey CEO

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The head of one of the UK

Pete Redfern is calling for the government to ensure the scheme is restricted to its proposed time limit of three years.

In an interview with the Daily Telegraph, Redfern said that critics of the scheme were “quite right to worry” that Help to Buy could distort the UK housing market.

He stopped short of agreeing that the £130bn scheme will lead to a bubble in house prices, and claimed that the scheme had in fact helped the market “over a bump”, but envisages potential problems further down the line.

“Where I would agree with the concerns is if successive governments find it too difficult politically to exit [Help to Buy] – that’s where there is a genuine hazard.”

He added: “I think there needs to be thought given now to a sensibly managed withdrawal – even if the timing isn’t firm, at least what the methodology is, because as we get closer to that date, it will start to figure more highly in the minds of banks and individual homebuyers. Everybody needs a sense of confidence about what the plan is.”

The Help to Buy scheme, announced by George Osborne in his April Budget aims to help borrowers buy new-build home using government-funded interest-free equity loans of up to 20% of a property’s value.

The scheme is also aimed at boosting the construction industry. Critics have warned that government interference risks overinflating the cost of new-build properties, and that the scheme will be hard for the State to simply withdraw from at the planned deadline of April 2016.

In May, Sir Mervyn King, then Governor of the Bank of England, warned that Help to Buy could make the house market dependent on the state.

“We do not want what the United States have, which is a government-guaranteed mortgage market (which) they are desperately trying to find a way out of,” he said.