Controversial Help to Buy scheme aids social mobility, claims David Cameron

Figures show average-income first-time buyers make up the bulk of 2,000-plus who have taken up scheme

The Government's controversial mortgage guarantee scheme will help boost social mobility by opening up home ownership to those without wealthy parents, David Cameron has claimed.

Figures showing average-income first-time buyers make up the bulk of 2,000-plus who have taken up the scheme in its first month.

The Prime Minister said initial figures showed Help to Buy - which critics say risks fuelling a new house price bubble - was helping the "hardworking people" it was aimed at.

He welcomed some of those accepted for a total of £365 million of home loans to a reception at Downing Street.

Mr Cameron said the scheme would help address some of the concerns raised by former prime minister Sir John Major about the lack of social mobility in the country.

He said: "This is about social mobility. The fact is that without Help to Buy we were beginning to see a country where only people who had wealthy mums and dads who could give them the money for their deposit were able to buy a flat or a house."

Surrounded by those who had benefited from the scheme he said: "Many of the people standing behind me have only been able to buy a flat or a house because they can now get a bigger mortgage without such a large deposit.

"They can afford those mortgage payments and they will be able to achieve their dream of owning their own flat or home.

"This scheme is about social mobility, it's about helping people who don't have rich parents to get on and achieve their dream of home ownership which is why it's so welcome."

Addressing the scheme's critics, Mr Cameron said: "It's been said 'Will it be big enough?' Well, it's certainly got off to an extraordinary start. Seventy-five families every day have taken steps to achieving their dream of home ownership.

"A third of a billion pounds of mortgages have so far been agreed.

"There were some who wondered if it would only be confined to the South of England. That hasn't been the case - Lloyds has found that 80% of their customers for Help to Buy are outside London and the South East.

"Some people thought it might only benefit those buying relatively expensive properties. Again, that's not the case - the typical property being bought under this scheme is around the average house price in the UK."

It has been claimed the scheme will drive up prices by increasing housing demand without stimulating the supply of new properties.

But Mr Cameron said: "We are not encouraging people to buy homes they can't afford or have mortgages they can't afford, we are helping them get mortgages they can afford.

"Secondly, it does help unlock the problem of a shortage of housing supply. Put frankly, the builders won't build, the developers won't develop unless the buyers are able to buy.

"That's why we are seeing growing levels of housing investment and housebuilding in our country. The two issues are linked."

Under the latest phase of Help to Buy, rushed forward by three months as part of a Conservative response to the rising cost of living, people can buy properties worth up to £600,000 with a deposit of only 5%.

NatWest owner Royal Bank of Scotland said it has taken 1,075 applications for loans - including from 75 teachers and 83 engineers - to buy properties with an average value of £167,565.

Almost three-quarters of customers were looking to buy their first home and the majority were couples applying with a joint salary of less than £50,000 and borrowing around £159,000.

Halifax, which is part of Lloyds Banking Group, has received 1,309 applications, of which more than 80% were from people outside London and the South East.

The average price of a property it was lending on was £160,157, with the first four weeks of the scheme generating applications to the value of £194 million.

So far, just a handful of lenders have launched products under the latest phase, led by the UK's state-backed banks.

But others, such as Santander and Barclays, have announced that they intend to participate.

Graeme Leach, chief economist at the Institute of Directors, warned that Help to Buy will force house prices up unless planning restrictions are eased. He said it could act like a "drug" on politicians, who will find it difficult to quit.

Mr Leach told BBC Radio 4's The World At One: "Yes, more people will get on the housing ladder, but they will pay more for the privilege, because we have a situation where if we try to stimulate demand for the housing market in the UK, there are so many restrictions on supply that it just drives up the price.

"What the housing market really needs is Help to Supply, not Help to Buy."

Mr Leach added: "Our concern is this is a drug that politicians could get hooked on and it will be very difficult to get them off, because people will start saying 'If we withdraw the scheme, it will drive down prices and make the economy weaker'. Once we get into this process and once we get this policy embedded, it is going to be very difficult to get off it."

But Treasury minister Sajid Javid told the programme: "Right at the outset, when we first designed this scheme, we said very clearly it has got a shelf life of three years. The Bank of England Financial Policy Committee (FPC) will look at it after three years and make a recommendation of what should happen and if their recommendation is that the scheme should stop, it will stop.

"We have also announced that every September we are going to ask the FPC to look at the scheme and make any recommended changes to any of the parameters. That is designed to make sure that this scheme doesn't cause some kind of housing bubble - which is in no one's interest - but remains focused on what it is intended to do, which is to help people own their own home, particularly first-time buyers."

The chairman of the Commons Treasury Committee, Andrew Tyrie, wrote to the Bank last week asking for clarification of its responsibilities in relation to Help to Buy. He warned that the Bank's new task of making recommendations on Help to Buy should not result in it taking on a responsibility for housing policy as a whole.

Mr Tyrie told The World At One: "The Government is responsible, and should be responsible, for housing policy, helping first-time home-buyers and those struggling to get a mortgage. The Bank has its own responsibilities to ensure we don't end up with another boom and bust, like we had five years ago.

"It is absolutely crucial that by offering advice, the Bank don't in any way compromise their crucial role as the watchdog of the overall UK economy. They shouldn't allow themselves to come to be seen as responsible for the scheme.

"It could be that at some future date, the Bank would want to use the powers it has got to take the heat out of the housing market. It wouldn't help anybody if the advisory role they are being given on the Help to Buy scheme got in the way of that."


people'It can last and it's terrifying'
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
footballStriker has moved on loan for the remainder of the season
footballFeaturing Bart Simpson
Have you tried new the Independent Digital Edition apps?
ebooksAn unforgettable anthology of contemporary reportage
Katie Hopkins appearing on 'This Morning' after she purposefully put on 4 stone.
peopleKatie Hopkins breaks down in tears over weight gain challenge
Arts and Entertainment
Olivia Colman topped the list of the 30 most influential females in broadcasting
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
news Video - hailed as 'most original' since Benedict Cumberbatch's
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Maths Teacher

£120 - £162 per day: Randstad Education Hull: Randstad Education are currently...

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

SQL Technical Implementation Consultant (Java, BA, Oracle, VBA)

£45000 - £55000 per annum + Benefits + Bonus: Harrington Starr: SQL Technical ...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering