Treasury figures have revealed the controversial second phase of the government’s help-to-buy scheme, blamed for pushing up London property prices, has provided a “much needed lifeline to the housing market recovery in the regions”, the Telegraph reports.
The scheme allows prospective home owners to buy a new-build or existing home priced up to £600,000 with only a 5 per cent deposit, by offering guarantees over a portion of any potential losses for lenders.
In the first six months of the scheme, which was launched in October 2013, over 7,000 mortgages were completed with the support of the scheme. Of these 80 per cent were purchased by first time buyers with a much higher proportion in the north-west and the south-east.
According to the Treasury, just 5 per cent of purchases using Help to Buy 2 were located in London, with 14 per cent in the north west, 14 per cent in the south east followed by 9 per cent in the East Midlands, Yorkshire and Humberside and the east.
It was most commonly used by those with a household income of between £30,001 and £40,000 to buy property below £125,000.
The scheme has come under much criticism recently and has been blamed for pushing annual house price growth to double digits.
FTAdviser sister publication the Financial Times reported that three former chancellors of the Exchequer - Lord Lawson, Lord Lamont and Alistair Darling – said the second phase of the scheme has the “potential to inflate a future housing bubble”.
The Organisation for Economic Co-operation and Development said in its latest report that Britain’s housing market, buoyed by record low interest rates and several government-backed subsidies for home buyers, was in “danger of over-heating without further action by ministers and regulators”.
Vince Cable, the Liberal Democrat business secretary, is among those to have called on chancellor George Osborne to reconsider the scheme because of a “raging housing boom”.
Furthermore, the Bank of England also recently warned if the Mortgage Market Review fails to cool down the housing market, it will have to step in.
Prostitution and drugs boost economy
Official data has revealed that prostitution and illegal drugs are contributing around £10bn a year to the British economy, the Telegraph reports.
These illegal activities are likely to increase the level of of GDP in 2009, the most recent year which the Office for National Statistics, has calculated the data for, by around £10bn.
The ONS data revealed that £5.3bn is due to prostitution while illegal drugs are worth £4.4bn to the economy.
Jump in levy for DB schemes
Some 24 per cent of employers running final salary schemes face a 150 per cent jump in the annual levy they pay into the “pensions lifeboat fund” under new proposals that were announced yesterday (29 May 2014), the Financial Times reports.
The Pensions Protection Fund, which pays benefits to final salary scheme members if their employers go bust unveiled plans for a “radical overhaul” of the way it assesses the insolvency risk of schemes paying the levy in a new consultation document.