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| Budget 2013: Ministers deny 'second home subsidy' | Budget 2013: Ministers deny 'second home subsidy' |
| (34 minutes later) | |
| A row has erupted over whether a Budget initiative aimed at helping people get on the housing ladder could be used to fund the purchase of second homes. | |
| Shadow Chancellor Ed Balls said the Help to Buy scheme amounts to a "spare homes subsidy" for the better-off. | Shadow Chancellor Ed Balls said the Help to Buy scheme amounts to a "spare homes subsidy" for the better-off. |
| But Housing Minister Mark Prisk said applicants would have to "divest" their existing properties to be eligible. | But Housing Minister Mark Prisk said applicants would have to "divest" their existing properties to be eligible. |
| The Bank of England would guarantee loans for people putting down 5% deposits under the scheme. | The Bank of England would guarantee loans for people putting down 5% deposits under the scheme. |
| The final details have yet to be worked out but it will facilitate £130bn of home loans over three years. | The final details have yet to be worked out but it will facilitate £130bn of home loans over three years. |
| 'Bedroom tax' | 'Bedroom tax' |
| The aim of the UK-wide policy, which will be available for homes up to £600,000 from January 2014, is to breathe new life into the housing market, which has been hit by banks demanding bigger deposits from homebuyers. | |
| Treasury sources have stressed to the BBC that it was not designed for second homes but said that they would not be specifically excluded. | Treasury sources have stressed to the BBC that it was not designed for second homes but said that they would not be specifically excluded. |
| Shadow chancellor Ed Balls was quick to seize on the apparent confusion, taunting Chancellor George Osborne in a Commons debate, in which he linked the policy to government plans to cut housing benefit for social housing residents with spare rooms, dubbed the "bedroom tax" by Labour. | Shadow chancellor Ed Balls was quick to seize on the apparent confusion, taunting Chancellor George Osborne in a Commons debate, in which he linked the policy to government plans to cut housing benefit for social housing residents with spare rooms, dubbed the "bedroom tax" by Labour. |
| "It now seems his mortgage scheme will help people no matter how high their income to buy a subsidised second home worth up to £600,000," Mr Balls told MPs. | "It now seems his mortgage scheme will help people no matter how high their income to buy a subsidised second home worth up to £600,000," Mr Balls told MPs. |
| "From what I can see, the government is basically saying if you have got a spare room in a social home, you will pay the bedroom tax but if you want a spare home and you can afford it, we will help you buy one." | "From what I can see, the government is basically saying if you have got a spare room in a social home, you will pay the bedroom tax but if you want a spare home and you can afford it, we will help you buy one." |
| He added: "That is not just tax cuts for millionaires, it is - dare I say it - a spare homes subsidy." | He added: "That is not just tax cuts for millionaires, it is - dare I say it - a spare homes subsidy." |
| He challenged Mr Osborne to confirm funding would be limited to first-time buyers and owner-occupiers and to pledge that second homes and buy-to-let properties would be excluded. | He challenged Mr Osborne to confirm funding would be limited to first-time buyers and owner-occupiers and to pledge that second homes and buy-to-let properties would be excluded. |
| Housing Minister Mark Prisk insisted that the Help to Buy scheme would only be available for "family" homes. | Housing Minister Mark Prisk insisted that the Help to Buy scheme would only be available for "family" homes. |
| "I think Ed Balls is claiming that somehow you can get a loan under the Help to Buy scheme for your second home," he told BBC Radio 4's The World at One. | "I think Ed Balls is claiming that somehow you can get a loan under the Help to Buy scheme for your second home," he told BBC Radio 4's The World at One. |
| "Let's be very clear - that is not the case. As with the current schemes, you would first have to divest your existing property prior to being able to proceed with any Help to Buy sale, so this is about family homes, it is not about second homes." | "Let's be very clear - that is not the case. As with the current schemes, you would first have to divest your existing property prior to being able to proceed with any Help to Buy sale, so this is about family homes, it is not about second homes." |
| 'Housing boom' | 'Housing boom' |
| But the BBC News Channel's chief political correspondent Norman Smith said the Treasury had not closed the door entirely on the scheme being used for second homes. | But the BBC News Channel's chief political correspondent Norman Smith said the Treasury had not closed the door entirely on the scheme being used for second homes. |
| Officials were trying to work out a definition that allowed parents to buy a home for their children but not to buy a holiday home for themselves, he added. | Officials were trying to work out a definition that allowed parents to buy a home for their children but not to buy a holiday home for themselves, he added. |
| There is also concern that the Help to Buy scheme could fuel another unsustainable house price boom, making properties less affordable for young people. | There is also concern that the Help to Buy scheme could fuel another unsustainable house price boom, making properties less affordable for young people. |
| Conservative MP Kwarsi Kwarteng said the shortage of mortgages for first-time buyers was a social problem that the government was right to address. | Conservative MP Kwarsi Kwarteng said the shortage of mortgages for first-time buyers was a social problem that the government was right to address. |
| But he added: "My worry with this is that having a system where you are giving mortgages without increasing the supply will lead to asset price inflation, because obviously if the amount of supply remains the same and you are making credit easier, the tendency would be for the prices to go up. | But he added: "My worry with this is that having a system where you are giving mortgages without increasing the supply will lead to asset price inflation, because obviously if the amount of supply remains the same and you are making credit easier, the tendency would be for the prices to go up. |
| "I think we could have announced something bolder that actually increased the supply of homes." | "I think we could have announced something bolder that actually increased the supply of homes." |
| BBC business editor Robert Peston said the new scheme was "ambitious" but came with risks as "growth sparked by a housing-linked consumer boom might not be altogether healthy" for the economy. | BBC business editor Robert Peston said the new scheme was "ambitious" but came with risks as "growth sparked by a housing-linked consumer boom might not be altogether healthy" for the economy. |
| Mr Osborne hit back at fears of house price inflation, saying the Bank of England would be able "to turn off the tap" on the finance after three years if the market was over-heating | Mr Osborne hit back at fears of house price inflation, saying the Bank of England would be able "to turn off the tap" on the finance after three years if the market was over-heating |
| He said the scheme was needed as the mortgage market was "not functioning properly". | He said the scheme was needed as the mortgage market was "not functioning properly". |
| "The intention of the scheme is absolutely clear - 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," he told BBC Radio 4's Today programme. | "The intention of the scheme is absolutely clear - 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," he told BBC Radio 4's Today programme. |
| The Council of Mortgage Lenders has said the scheme must be attractive to borrowers, viable for lenders and not overly complex. | |
| Although the benefits would not be immediate, the trade body said it should enable lenders "to offer more low-deposit loans than they would otherwise be able to do" without worrying financial markets and regulators. | |
| The Help-to-Buy scheme was one of a number of initiatives announced in Wednesday's Budget - in which growth forecasts for 2013 were halved to 0.6% and the Office for Budget Responsibility suggested the government's efforts to cut the deficit - the difference between money spent and earned in a year - have stalled and it will remain stuck at about £120bn for three years. | The Help-to-Buy scheme was one of a number of initiatives announced in Wednesday's Budget - in which growth forecasts for 2013 were halved to 0.6% and the Office for Budget Responsibility suggested the government's efforts to cut the deficit - the difference between money spent and earned in a year - have stalled and it will remain stuck at about £120bn for three years. |