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Conservatives bring forward second phase of Help to Buy David Cameron brings forward Help to Buy scheme
(about 2 hours later)
A scheme designed to make it easier to get a mortgage will start from next week, the Conservatives have said, as their party conference opens. A controversial scheme allowing people in England to take out 95% mortgages will be launched next week - three months earlier than planned.
The second phase of Help to Buy, which allows people in England to get 95% mortgages, was due to start in January. PM David Cameron made the announcement as the Conservatives gathered in Manchester for their annual conference.
Shadow chancellor Ed Balls said David Cameron should bring forward investment to build more affordable homes instead. He rejected fears the Help to Buy scheme will fuel a housing bubble.
The Conservatives will also announce a crackdown on police giving cautions for serious criminal offences. He told the BBC's Andrew Marr show the market was "recovering from a very low base" and first time buyers needed help to get on the housing ladder.
Housing ladder "As prime minister I am not going to stand by while people's aspirations to get on the housing ladder are being trashed."
The Help to Buy initiative aims to make it easier to afford a deposit for a property. He added: "If we don't do this it will only be people with rich parents to help them who can get on the housing ladder - that is not fair, it is not right."
The government will guarantee 15% of a mortgage, allowing lenders to provide up to 95% mortgages at reduced risk. 'Trust'
In an interview in the Sun on Sunday, the prime minister said he was eager to get young people on the housing ladder. He rejected concerns - raised by Business Secretary Vince Cable among others - of an unsustainable boom in house prices, particularly in the south-east of England.
Mr Cameron said: "The need is now. I have always wanted this to come in and frankly the earlier the better. The prime minister urged people to "trust" the Bank of England, which has been given an enhanced role in monitoring the effect of the scheme on prices.
"What concerns me is that you can't buy a house or a flat even if you are doing OK, you have got decent job prospects and good earnings. And he said mortgage-lenders, including the Halifax, RBS and Nat West, had already signed up to the scheme.
"I am not prepared to be a prime minister of a country with caps on aspiration." The first phase of Help to Buy, which applied to the purchase of new homes only, was launched earlier this year.
Under the second phase, which was due to launch in January, the government will guarantee 15% of a mortgage on any property worth up to £600,000, allowing lenders to provide up to 95% mortgages at reduced risk.
If financial institutions are asking for a 20% deposit, the government will guarantee 15% of the mortgage, allowing for deposits as low as 5%.
Applications for loans for the scheme will now be brought forward to 7 October but the loans wont be paid out until 1 January, so anyone hoping to complete on their home purchase using the second phase of Help to Buy scheme before 2014 will not be able to.
House prices rose at their fastest rate in more than six years in September, according to property analysts Hometrack.
The report follows similar findings from Nationwide building society last week, which reported evidence that the market pick-up "is becoming increasingly broad-based".
Adam Marshall, of the British Chambers of Commerce, said: "With all the concern expressed about Help to Buy - rushing into it seems less than responsible on part of government."
Affordable homesAffordable homes
Responding to the announcement, Labour's Ed Balls said: "Rising demand for housing must be matched with rising supply, but under this government house building is at its lowest level since the 1920s.Responding to the announcement, Labour's Ed Balls said: "Rising demand for housing must be matched with rising supply, but under this government house building is at its lowest level since the 1920s.
"Unless David Cameron acts now to build more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder."Unless David Cameron acts now to build more affordable homes, as Labour has urged, then soaring prices risk making it even harder for first time buyers to get on the housing ladder.
"You can't deal with the cost of living crisis without building more homes, so it's no wonder that for millions of families this is no recovery at all.""You can't deal with the cost of living crisis without building more homes, so it's no wonder that for millions of families this is no recovery at all."
But Conservative Party chairman Grant Shapps defended the scheme.
"Lot's of people who say 'oh, we shouldn't be doing this', are people who've got a house, got a mortgage, sometimes they've paid off the mortgage," he said.
"This generation is staying living with their parents into their 30s because they can't get access to exactly the same kind of mortgages that have always been available and have operated for decades, which is where you can borrow 90 or 95% in order to buy a house."
Elsewhere, new guidelines to be announced at the conference in Manchester will scrap the giving of police cautions for rape, manslaughter, robbery, child sexual abuse and other serious offences.Elsewhere, new guidelines to be announced at the conference in Manchester will scrap the giving of police cautions for rape, manslaughter, robbery, child sexual abuse and other serious offences.
The Tories said the move would stop offenders who commit such crimes ending up "with just a slap on the wrist"The Tories said the move would stop offenders who commit such crimes ending up "with just a slap on the wrist"
In other developments:In other developments:
A Tory source said: "80% of our councillors didn't respond to this survey so it's hardly representative. It should be taken with a large pinch of salt."A Tory source said: "80% of our councillors didn't respond to this survey so it's hardly representative. It should be taken with a large pinch of salt."
In an interview with the Sunday Telegraph, Mr Cameron insisted he was "not chasing off to the right".In an interview with the Sunday Telegraph, Mr Cameron insisted he was "not chasing off to the right".
"I'm very firmly anchored where I have always been," he said. "Yes, I want to win back voters from UKIP.""I'm very firmly anchored where I have always been," he said. "Yes, I want to win back voters from UKIP."
Swing votersSwing voters
Meanwhile, proposals for tax breaks for some married couples and civil partners have come under attack from both Labour and the Liberal Democrats.Meanwhile, proposals for tax breaks for some married couples and civil partners have come under attack from both Labour and the Liberal Democrats.
Mr Cameron said introducing tax breaks would mean four million married couples and civil partnerships - those paying lower tax rates - could be up to £200 a year better off from April 2015.Mr Cameron said introducing tax breaks would mean four million married couples and civil partnerships - those paying lower tax rates - could be up to £200 a year better off from April 2015.
Defence Secretary Philip Hammond also announced plans to offer interest-free home loans to armed forces personnel.Defence Secretary Philip Hammond also announced plans to offer interest-free home loans to armed forces personnel.
Other policy announcements are set to include a crackdown on welfare payments and an expansion of free schools.Other policy announcements are set to include a crackdown on welfare payments and an expansion of free schools.
On the eve of the conference, BBC political correspondent Iain Watson said the Tories would be trying to convince swing voters that they should be the party of choice for hard-working families.On the eve of the conference, BBC political correspondent Iain Watson said the Tories would be trying to convince swing voters that they should be the party of choice for hard-working families.
The conference will open on Sunday with a tribute to former Prime Minster Baroness Thatcher, who died aged 87 in April, and close with Mr Cameron's keynote speech on Wednesday.The conference will open on Sunday with a tribute to former Prime Minster Baroness Thatcher, who died aged 87 in April, and close with Mr Cameron's keynote speech on Wednesday.