A prominent London think-tank has joined the chorus of criticism of the chancellor’s new policy to help aspiring first-time house buyers yesterday.
The new Help to Buy Isa announced by George Osborne on Wednesday allows young savers to put a maximum of £200 a month away. The government will add 25 per cent to the Isa when it is used as a deposit for a house purchase. The maximum is £12,000 which would result in a £3,000 top-up.
“Increased demand will bid up prices. To the extent that housing supply can’t respond to that, there’s no way that overall housing affordability can be increased,” said economist Stuart Adam from the Institute for Fiscal Studies. He said the policy will benefit first-time buyers and current owners at the expense of everyone else. Adam also believes the policy could be regressive, in that it provides a higher reward to those who need it least. “Certainly those who find it easiest to qualify for the maximum top-up are going to be those who have the £12,000 anyway or have wealthy parents.”