Ahead of this month’s Budget, a 58-page paper by the committee in response to the chancellor’s autumn statement, reasserted the TSC’s tacit opposition to the scheme.
It warned that the scheme could produce a negative distorting effect on the housing market, which could be further exacerbated by its eventual withdrawal.
Citing the dangers of a potential property bubble, the paper warned: “The danger is that it will be difficult for the Bank of England’s financial policy committee to identify when a speculative housing bubble may have begun. Such a bubble, driven by increasing lending to households, would be a risk to the UK economy. It may have further distorting effects on the UK housing market when withdrawn.”
It added that the Treasury should act “in advance” to mitigate market distortions before they arose, stating: “The government should explain now what the exit strategy from the Help to Buy mortgage guarantee scheme will be in order to better influence expectations.
“The Bank of England may also need to adjust the timing of its regular annual review of the scheme accordingly.”
|Other key points from the paper|
■ A call for the government to start a debate on the trade-offs inherent in ring-fencing of budgets and the allocation of spending cuts.
■ Chairman Andrew Tyrie MP warned that with 43 per cent of departmental expenditure limits protected, public expenditure control would become increasingly difficult.
■ Within the paper was a call for a review into anti-avoidance measures and the actual amount of money raised by the measures.
Scott Gallacher, principal for Leicestershire-based Rowley Turton, said: “Help to Buy is basic electioneering by the government. Property is still overvalued and all it’s doing is creating an artificial bubble. More should instead be done to help self-employed people who have the deposits but can not prove their income as much.”