The Government’s NewBuy and FirstBuy schemes are “ schizophrenic” and “politicians seeking votes” while avoiding the underlying problem of a diminishing stock of houses.
Paragon Mortgages managing director John Heron says the regulator’s attitude towards higher LTV lending is at odds with these schemes designed to encourage riskier lending.
Speaking at the Paragon great buy-to-let debate last week, he said: “[These schemes are] totally schizophrenic because in the real driver is the regulation of financial markets and, in that area, policy is doing everything it can to drive lenders away from higher risk lending. Higher LTV lending to FTBs is higher risk lending. On one hand we are doing everything we can to restrict lending to FTBs and then, on the other hand, we have these eye catching initiatives.”
National Landlord Association chief executive Richard Lambert says the schemes, while headline grabbing, do nothing to address the underlying issue which is the gradual erosion of housing stock as house building targets are missed.
He says: “It is politicians seeking headlines and votes but it is not addressing the fundamental problem which is getting more houses built. If you build more houses, then prices will inevitably come down.”
Michael Ball, a professor of urban and property economics at Reading University, agrees that by focusing on these schemes, the real problem is being overlooked.
He says: “What the government should do is focus on building more, and needs to be far more radical in doing that than it so far has been. It is a very difficult issue and something of a political hot potato as it means building lots more houses.
“If you have a fixed stock of housing, all you are going to do is affect pricing and what we really need is a good, efficient supply of housing.”