Lloyds Banking Group is warning the Government’s Help to Buy scheme will create a housing bubble unless it is introduced alongside significant planning reforms.
In an interview with the Financial Times, Lloyds chief executive António Horta-Osório said the scheme needed “tweaking” and that its main focus should be outside of London.
Horta-Osorio joins Shadow Chancellor Ed Balls by calling on the Government to do more to boost housebuilding in order to make Help to Buy work.
Horta-Osorio said: “It is important that planning permits, building authorisations and social housing projects are [liberalised] so that the increase in [mortgage] transactions does not lead to a substantial increase in house prices.”
He added: “I think the scheme should be focused outside London and the southeast. [In the rest of the country] you have nothing close to a housing bubble.”
Lloyds brand Halifax last week announced the range of products it would be offering under the second part of Help to Buy, including a 5.19 per cent two-year fixed rate available to 95 per cent loan-to-value.