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Osborne denies claims that Help to Buy scheme will drive up house prices

 

Chancellor George Osborne has defended the Treasury’s plans for a new Help to Buy scheme, amid concerns that the move will push up property prices.

 

Giving evidence to MPs, the Chancellor insisted that experts believed the scheme would encourage house building and increase the availability of mortgages.

 

His comments follow remarks made by top officials from the UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR).

 

OBR budget expert Steve Nickell said: ‘The key is: is it just going to drive up house prices? By and large, in the short run the answer to that is yes.

 

However, he added: ‘In the medium term will the increased house prices stimulate more house building, and our general answer to that would probably be: a bit. But the historical evidence suggests not very much.’

 

OBR chairman Robert Chote said his organisation had been unable to make a detailed assessment of the impact of the scheme because ministers had not provided enough information on how it would work.

 

The Help to Buy scheme was one of the headline measures unveiled in the Chancellor’s recent Budget. Under the scheme, shared equity loans of up to 20% will be offered to all buyers of newly built homes.

 

The details are currently the subject of debate, but it is thought that the scheme will be available for purchases on homes up to £600,000.

 

The Chancellor also introduced a new mortgage guarantee which will be used to support £130bn of mortgages for old and new homes.