Paying the price

THERE can be no doubt that many hard-pressed would-be home buyers are desperate for some form of help, but whether the Government’s new buy guarantee scheme is the right way to deliver it is open to debate. The welcome it has received from within the property industry has been muted, to say the least, and as with so many eye-catching coalition initiatives, close scrutiny raises as many questions as it answers.

One of the principal uncertainties centres on the Government’s willingness to guarantee mortgages of up to £500,000, allowing buyers to take out much larger loans than they would otherwise be eligible for. Memories are plainly short within the ranks of the coalition; the past 30 years have seen homeowners persuaded that they could manage huge and barely affordable mortgages fall into arrears, negative equity and repossession. Interest rates are at a record low; when they inevitably rise, a large, Government-sponsored mortgage may not seem anything like as attractive to those faced with paying it.

Legitimate concerns also surround whether the policy will lead to a dash for new-build homes at the expense of older properties, potentially causing a log-jam in the chain of buying or selling. It may well be that the real beneficiary of the scheme is the building industry, which should be stimulated as result. Well and good, but only if it is not at the ultimate expense of pain for homeowners in the future.

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Better is the Government’s announcement that right-to-buy, one of the great triumphs of Margaret Thatcher’s premiership, is to be reinvigorated. Sensible discounts for tenants, enabling them to get a foot on the property ladder are to be welcomed, but the Government must ensure that sufficient new properties are provided to replace those sold.