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Housing Market

Volume 563: debated on Tuesday 14 May 2013

My right hon. Friend the Chancellor is in Brussels today at ECOFIN, exercising the considerable influence that Britain enjoys as a full member of the European Union. The Government are committed to the vital reforms needed to address long-term structural issues in the housing market. They have already committed to investing £11 billion during the spending review period, and in the Budget we announced the Help to Buy scheme, a major new package to increase the supply of low-deposit mortgages for creditworthy households, which I hope the hon. Lady will welcome.

In evidence to the Treasury Select Committee, the distinguished commentator, Martin Wolf, described the Government’s mortgage indemnity guarantee as

“good politics and horrendous economics.”

Why are the Government pursuing a policy that is likely to increase the price of already over-inflated property, rather than financing affordable social housing that is needed by hundreds of thousands of people across the country?

The hon. Lady comments on affordable social housing, but I note that during Labour’s 13 years in office the amount of social housing fell by 421,000. This Government’s policies will increase the amount of social housing by 200,000—a record on which she should compliment us. On the mortgage indemnity guarantee, offering support to many households who cannot afford the large deposits now required is a thoroughly good thing, and by involving the Financial Policy Committee of the Bank of England in a review after three years we also have a guarantee of financial stability.

The Government’s fiscal and other policies have cut the deficit by one third, helping to keep interest rates low. What would happen to the housing market and domestic mortgage costs were interest rates to rise, even by just 1%?

My hon. Friend makes an important point, and he will know that if mortgage rates increased by 1% it would add more than £10 billion a year to the costs for British households—not a consequence any of us on the Government Benches would welcome.

When the priority should be helping first-time buyers, will the Chief Secretary finally rule out the Help to Buy scheme being used to buy second homes—yes or no?

Actually, I have been very clear on this question throughout. It is not the intention of the Help to Buy scheme to aid people in buying second homes. The part of the scheme already up and running—the shared equity scheme—is available only for someone’s primary residence, and we will set out details of the mortgage indemnity guarantee as we go forward. The intention is not to help people buy their second homes.

Is it not staggering that two months after the Budget the Chief Secretary is still unable to rule out people buying a second home for themselves under this scheme? Let me try another question. With house building at its lowest since the 1920s and the housing benefit bill rising, why did the Government not use funds from the 4G auction to build 100,000 more affordable homes?

The hon. Lady will know that housing completions are 19% above the trough of 2010, numbers of housing starts are 58% above the trough of 2009, and she should welcome that improvement. In the Budget, we announced a £5 billion package to help the construction sector through the Help to Buy shared equity scheme, which will support the construction of 76,000 properties, as well as a massive expansion of the Build to Rent programme. It is staggering that the hon. Lady cannot bring herself to welcome those measures.

Will the Minister welcome today’s figures showing that the number of first-time buyers increased by 20% this month? Will he also welcome the fact that the Department for Communities and Local Government has shown that 37,000 new homes for social rent were built last year, which is a record since 1997?

I welcome those figures. They suggest that the policies being pursued by this Government are having the desired effect.