Chancellor George Osborne has refused to rule out home owners purchasing a second or third home using the new Government-backed mortgage indemnity guarantee.
The flagship Budget policy, announced last week, is designed to target those struggling to buy their first home or move to a bigger property. It specifically excludes buy-to-let and interest-only deals but is silent on second homes.
The scheme, set to launch at the beginning of 2014, can be used to purchase new and existing properties. It will run for three years and the Treasury predicts it will boost mortgage lending by £130bn.
Speaking to the BBC last week, Osborne was asked whether borrowers will be able to buy a second, third or fourth home under the scheme.
He said: “We are going to consult on the details but the mortgage market is an extremely complex thing. The intention of the scheme is absolutely clear, which is that it is for people who want to get their first home or have a home and want to move to a bigger home, because perhaps they have got a bigger family. We are working with the industry to get a scheme that works.”
Trinity Financial product and communication manager Aaron Strutt says: “The point of the scheme is to get the housing market moving so if people looking for second homes have the cash and they want to spend it then it makes sense to let them.”
Despite the explicit ban on buy-to-let, Lettingfocus.com owner David Lawrenson questions whether the system will be open to abuse by landlords.
He says: “It is hard to police whether someone is renting out a home in practice.”
A Treasury spokeswoman says it will talk to the industry about the details to ensure the scheme targets the right people and will report back later this year.