Warning over 'spare home subsidy'
The Government must show its new mortgage guarantee scheme does not become a "spare home subsidy" with taxpayers underwriting lending to people who want second homes, shadow Treasury minister Chris Leslie has said.
Chancellor George Osborne announced the multibillion-pound Help-to-Buy scheme in last month's Budget as part of efforts to get more people on the property ladder with a deposit as low as 5%. But there are fears it could be used by the well-off to purchase a second home.
The scheme is being introduced in two stages, with the equity loan part of it already under way. The second part, to be launched next year, sees the Government guaranteeing lenders £130 billion worth of low-deposit mortgages on new or existing homes worth up to £600,000.
But Mr Leslie warned the Commons the scheme may lead to the Government underwriting mortgages for those well off enough to be able to afford a second home while the so-called bedroom tax will mean benefits will be deducted from social housing tenants found to have a spare bedroom.
Labour have tabled an amendment to the Finance (No 2) Bill, which contains the contents of the Budget, forcing the Government to report to Parliament on whether the scheme has been taken up by those trying to purchase a second home and if they have managed to prevent this happening.
Debating the amendment as the Bill reached committee stage on Wednesday, Mr Leslie told the House of Commons: "The particular question we have anxiety about is whether this underwrite scheme is going to have unintended support for those wishing to buy second homes.
"In other words, the hard-pressed taxpayer subsidising an element of activity which really shouldn't be a priority for the taxpayer at this particular point in time.
"This particular scheme seeks to extend taxpayer guarantees unnecessarily in this particular area.
"Effectively, ministers are saying that if people have a spare room in a social home, they have got to pay the bedroom tax, but if they want a spare home and can afford it, the Government will help them to buy one.
"No wonder people are calling this the 'spare home subsidy'."