The chief executive of Lloyd’s Banking Group has questioned the Help to Buy scheme – despite the bank backing it.
Antonio Horta-Osorio has voiced his concerns over whether the initiative risks creating a housing bubble and actually making the problem it was supposed to address even worse.
He has said that in order to avoid such a thing happening, planning and building laws should be relaxed – resulting in the creation of more homes to allow supply to meet demand.
Mr Horta-Osorio also suggested that a focus should be placed away from London and the south-east.
Help to Buy has already seen interest in mortgages soar, with Royal Bank of Scotland claiming it has received double the number of enquiries it would normally expect since its launch – booking 5,000 appointments with customers in the first few hours of going live.
The £12 billion scheme allows potential buyers to secure a loan with a five per cent deposit, while the government will guarantee a further 15 per cent in order to allow the purchaser access to preferential lending rates.