Chris Giles, writing in the Financial Times today, makes very good points on the UK government’s Help to Buy scheme. This programmes starts in January 2014 for three years, using £130bn to guarantee 20% of new mortgages. It was announced in the March 2013 Budget and is already showing an impact in rising house prices in and around London. The Governor of the Bank of England has criticised this programme as unsustainable and bubble-making.
Reported elsewhere was the delight within HM Treasury when the Office of National Statistics ruled that the £130bn was private debt, not public debt, even though the government are on the hook for any losses.
A key point made in the article is that this programme redistributes wealth from new buyers to existing owners.
Another key point would be to question the cuts in Housing Benefit (bedroom tax, weekly cap, etc) while pumping £130bn into the mortgage market in the run up to the next general election.
Source: FT, 25/26 May, p13.