Home loan plan slammed over fears of misuse

THE TREASURY yesterday rushed to defend the Budget’s flagship £130bn plan to guarantee risky mortgages, insisting it will not be available to people who want to buy second homes.

Chancellor George Osborne initially suggested that all home purchases would be eligible for the new help to buy scheme, which will see the state back hundreds of thousands of homebuyers who can only raise a five per cent deposit.

Housing minister Mark Prisk later insisted there would be provisions to stop people using the programme scheme to build up property portfolios – although he admitted officials are still working on the details. “You would first have to divest your existing property prior to being able to proceed with any help to buy sale,” he told the BBC.

The Treasury itself said that it is difficult to define a second home, citing the example of a parent who provides their child with a deposit to take out a mortgage.

Critics have attacked the government’s intervention in the mortgage market, suggesting the policy risks fuelling another housing bubble. The Institute for Fiscal Studies (IFS) yesterday said the scheme held some considerable economic risks for the UK.