Budget 2013: Second home buying 'not excluded' outright

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Budget plans to make it easier for people to buy properties would not exclude second home buying outright, Communities Secretary Eric Pickles has told MPs.

He said any ideas in the Budget giving fresh impetus to home buying must be "carefully worded", allowing the policy to cater for situations such as marriage breakdown and parents acting as guarantors for children.

He was speaking during the fourth day of the Budget debate on 25 March 2013, which was focused on housing.

The initiatives, which were part of the Chancellor George Osborne's Budget on 20 March, would allow new or existing homeowners who raised a deposit of 5%, to borrow a further 20% from the government on an interest-free basis.

The second part of the scheme would be a mortgage guarantee element.

Mr Pickles said the government did not intend the scheme to aid people to buy second homes, but that it would have to endeavour not to "rule out people who are just coming out of a broken family, a broken marriage, or rule out people where parents are acting as guarantors for part".

The communities secretary said the Budget showed the coalition was prepared to act on housing.

Shadow communities secretary Hilary Benn said the schemes should not be made available to anyone wanting to buy a second home.

Mr Benn said: "We know the government has a soft spot for people who earn a lot of money but why are you proposing that your new deposit and mortgage scheme should be made available to anyone earning any amount, including millionaires, so that they can buy a house worth up to £600,000?"

Former chancellor Alistair Darling told MPs that the scheme risked sowing the seeds of a sub-prime crisis like that seen in the United States in 2007.

Mr Darling said the schemes did not address the lack of housing but instead could create a bubble of high prices.

He said: "If we look at housing, the problem here is that the announcement made last week is more likely to create yet another housing bubble because it will drive up asset prices and indeed some of it might even sow the seeds that gave rise to the sub-prime mortgage problem that we saw in the United States because what we are suffering from in this country is an acute lack of housing in just about every town and every city.

"Unless we can get through this log jam, unless we can see more housing being built, we will see prices going up and up and we will find the same difficulties that people have had in the past."

Former Liberal Democrat communities minister Andrew Stunell said he welcomed the coalition initiatives.

"I welcome these policies on housing in the Budget but there is still much more to do to improve the quality of our 20 million existing homes and to build the many more we need to the highest environmental standards."

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