Business secretary Vince Cable has questioned whether the Government should introduce the second part of the Help to Buy scheme, throwing doubt on the launch of the second part in January.
In an interview with Sky News today, Cable said the Treasury should rethink whether the second part of the scheme is needed in light of improving market conditions.
Help to Buy was the flagship policy of the March Budget and aims to boost the availability of 95 per cent loan to value mortgages but has come under fire over fears it could create a housing bubble.
The scheme works in two parts; the first part came into effect in April as a shared equity scheme for new build homes. The second part, a £130bn mortgage indemnity scheme, will come into force on January 1 for all properties worth up to £600,000.
Cable said: “We should certainly think about how it should come into effect, indeed whether it should come into effect in the light of changing market conditions. We do not want a new housing bubble.”
He suggested the scheme was not required in regions where house prices were beginning to rise such as London and the south east.
Cable said: “I think in many parts of the country it clearly is not a problem. If you are in Northern Ireland or Wales or indeed the East Midlands you would wonder what all this is about.
“But certainly in London and the South East, in the North East of Scotland, and in other areas, there are serious housing inflationary pressures.”
His warnings come in the same week Chancellor George Osborne launched a robust defence of the Help to Buy scheme and warning the housing market was still not working.
Yesterday, Treasury financial secretary Greg Clark told the House of Commons the scheme will go ahead and it is making progresss on details in discussions with lenders.
He said: ”The scheme comes into effect in January. Government members believe that home ownership should not be reserved for the well-off and the children of the well-off, which is why we are introducing this measure.”