Shadow chancellor Ed Balls is calling for the Bank of England to review the second phase of Help to Buy now after the Treasury said it will be given review powers from next year.
The Treasury announced earlier today that the financial policy committee will conduct annual reviews of the Help to Buy scheme every September and will be able to recommend modifications such as lowering the £600,000 limit for Help to Buy homes, and raising the fees paid by the lenders for the guarantee.
Responding to the announcement, Balls says: “Instead of waiting a year, the Bank of England should review the details of the second phase of Help to Buy now before it goes ahead.
“It is totally ill-thought through for George Osborne to decide a scheme which should be about helping first-time buyers will allow taxpayer-backed mortgages for homes worth up to £600,000.”
He adds: “George Osborne is still failing to address the fundamental problem of the lowest level of house building since the 1920s. You cannot deal with the cost of living crisis without building more homes.
“Rising demand for housing must be matched with rising supply. Unless George Osborne acts now to build more affordable homes, then he risks making it even harder for first-time buyers to get on the housing ladder. It is no wonder that for millions of families this is no recovery at all.”
At the Labour conference in Brighton this week, party leader Ed Miliband unveiled plans to build one million new homes by 2020 if elected as prime minister in 2015.
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.
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 for new and existing homes will come into force on January 1. It is available for properties worth up to £600,000.