George Osborne has spoken out in defence of the Help to Buy mortgage scheme.
Responding to claims that the scheme was adding “vodka to the punchbowl”, the chancellor of the exchequer denied that it is fuelling a housing bubble in London.
He emphasised that three-quarters of people using the government-guaranteed scheme lived outside the capital and south-east, and that it was benefiting “exactly the families we want it to help”.
Mr Osborne said that there were measures in place to regulate the scheme to avoid a housing bubble emerging, and said that it would end after three years.
“We have the Financial Policy Committee (FPC) which has the power to take away the punchbowl. It has powers to look at overall debt levels in the housing market and more broadly,” he added.
The FPC will undertake a formal review of the scheme annually, starting in September 2014.
The chancellor also said that the scheme is encouraging the re-emergence of high loan-to-value products. Help to Buy has also been credited with rejuvenating the housing market by offering mortgages to aspirant first-time buyers with just a five per cent deposit .