First-time buyers could be shut out of the housing market by a Help to Buy-fuelled house price rise, the International International Monetary Monetary Fund (IN F) has warned.
The scheme, announced in the March Budget, is designed to stimulate activity in the property market. The first part was launched last month, a shared equity scheme where the Government will loan a 20pc deposit to buyers of newbuild homes.
The second part is due to be launched next January and will extend to those remortgaging, although details are yet to be announced.
The IMFs said Help to Buy was aimed at boosting activity in the housing market, but warned: “This measure may temporarily help boost confidence in the housing market, but there is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing.
“To mitigate this risk and engineer a supply response, the government should consider fiscal disincentives for holding land without development.”
The report echoed warnings from various influential bodies in the UK such as the Office for Budget Responsibility, Treasury select committee and the Bank of England.
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