View more on these topics

Bank of England to review Help to Buy to stop housing bubble

The Bank of England is to be given the remit of monitoring the Help to Buy scheme and to recommend adjustments if there are signs that it is creating a house price bubble.

The financial policy committee will conduct annual reviews of the scheme every September and will be able to recommend modifications such as lowering the £600,000 cap or raising the fees paid by the lenders for the guarantee.

The Treasury told the BBC: “The Chancellor has asked the FPC to work with him every September, starting next year, to assess the ongoing impact of the Help to Buy scheme. Following that annual assessment, he has proposed that the FPC advise him on whether the key parameters of the scheme – the price cap and the fees charged to lenders remain appropriate.”

A BoE spokesman says: ”We welcome the opportunity for the FPC to assess each year the effect of the Help to Buy scheme on the sustainable evolution of the housing market and to advise on whether the price cap and fees charged to lenders are appropriate.”

Help to Buy was the flagship policy of the March Budget and aims to boost the availability of 95 per cent loan to value mortgages but has come under fire over fears it could create a housing bubble.

The scheme works in two parts; the first part came into effect in April as a shared equity scheme for new build homes. The second part, a £130bn mortgage indemnity scheme, which was first revealed by Mortgage Strategy in February, will come into force on January 1 for all properties worth up to £600,000.

Legal & General Mortgage Club managing director Ben Thompson says: ”There is no doubt that Help to Buy has helped to boost mortgage market after five years of little or no growth.  Whilst it is sensible for the Bank of England to review the scheme to ensure it isn’t causing drastic increases in house prices,  we think talk of a housing bubble  is slightly premature.

“Whilst the latest Nationwide House Price Index showed growth of 10% in London, in the North of England growth was only 0.2%.  These significant variations suggest the market is growing at different speeds across the UK and it is therefore too simplistic to suggest  a bubble is developing nationwide.”



Aviva: OFT report could “kill off” commercial master trusts

Aviva says the Office of Fair Trading’s report into the UK defined contribution pensions market could “kill off” commercial master trusts. The OFT warned trustees of multi-employer master trust arrangements “may not be sufficiently independent of the master trust provider to avoid potential conflicts of interest and always act in members’ interests”. It called for […]


Beaufort Group chief exec Alan Easter quits

Beaufort Group co-founder and chief executive Alan Easter is leaving the business after 18 months in charge, Money Marketing can reveal.  Having set up Beaufort alongside Simon Goldthorpe in March last year, Money Marketing understands Easter is leaving to set up a new financial services venture. The firm’s board will continue to be managed by […]


‘More dramatic than the RDR’: Inducements review could force firms out of business

Some large advice firms face a significant profits hit in the wake of the FCA’s clampdown on provider inducements, raising questions about their sustainability. Last week, the regulator published new guidelines on inducements and conflicts of interest after a thematic review of 26 providers and advice firms found over half could be in breach of its rules […]

Financial protection

Insurance: Truth or consequences Neil Dickey The Consumer Insurance (Disclosure and Representations) Act 2012 came in force on 6 April 2013. The Act deals primarily with the issue of what consumers must tell insurers before entering into an insurance contract, and removes both the principle of ‘utmost good faith’ and the duty of disclosure. As […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm