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Lloyds warns of Help to Buy bubble without more houses

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.

The second part of the scheme has also come under fire from Business Secretary Vince Cable, the ex-Bank of England governor Mervyn King and the International Monetary Fund.

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. 

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  1. The recommendation to shift the regional focus away from London is long overdue. Without this re-focus we may all pay the price in 2015/16.

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