Could Osborne's mortgage scheme be used to buy second homes? He doesn't know

Chancellor unable to say whether the rich will be able to get government support to buy second or third properties.

George Osborne's new mortgage guarantee scheme ("Help to Buy") garnered him plenty of favourable headlines from Fleet Street but is the Chancellor on top of the detail? Asked this morning on the Today programme whether the £12bn scheme, which will underwrite mortgages for buyers with deposits of between 5-20 per cent, could be used by the well-off to buy second (or third) homes worth up to £600,000, Osborne was unable to say. The Chancellor made it clear that this was not the intention but would only say that he was "working with the industry". 

The mortgage market is an extremely complex thing. The intention of the scheme is absolutely clear, which is that it is for people who want to get their first home or have a home and want to move to a bigger home, because perhaps they have got a bigger family. We are working with the industry to get a scheme that works.

The Treasury has issued a list of those properties that will not eligible for support, including buy-to-lets, but it makes no mention of second homes. Labour has been quick to pounce on the omission, noting that Osborne was unable to deny that the new scheme "will allow wealthiest to buy second homes with govt support". Ed Balls's special adviser Alex Belardinelli quipped that they could use next month's "millionaires' tax cut" to do so. 

Lib Dem peer Lord Oakeshott (Vince Cable's representative on earth) has also responded, urging Osborne to "say no now". If he wants to shut down an encouraging Labour line of attack, the Chancellor would be wise to take his advice. 

Update: Following Osborne's refusal to confirm that second homes will be exempt, Ed Balls has gone on the attack, declaring that the government "is basically saying that if you’ve got a spare room in a social home you’ll have to pay the bedroom tax, but if you want a spare home we’ll help you buy one."

Here's the statement in full: 

Not only is George Osborne pressing ahead with a tax cut for millionaires it now seems that his mortgage scheme will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000.

The Government is basically saying that if you’ve got a spare room in a social home you’ll have to pay the bedroom tax, but if you want a spare home we’ll help you buy one.

Is the Government really going to give millionaires a tax cut averaging £100,000 and then give them a taxpayer guarantee if they use that money as a deposit on a house - a second home or even a home to buy to let? Not just tax cuts for millionaires but subsidised mortgages for millionaires.

Surely people struggling to get a mortgage and those who want to own their first home must be the priority for help, not the small number who can afford to buy a second one. We will only tackle the housing crisis and help first time buyers if we finally build the new affordable homes we have said should be at the heart of any proper plan for jobs and growth.

This more of the same Budget stuck with a plan that is completely failing on growth, living standards and the deficit, but the one new thing George Osborne announced is already unravelling.

George Osborne leaves number 11 Downing Street in central London on March 19, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

GETTY
Show Hide image

The NS Podcast #176: Younge, guns and identity politics

The New Statesman podcast.

Helen and Stephen are joined by author and editor-at-large for the Guardian, Gary Younge, to discuss the findings of his new book: Another Day in the Death of America.

Seven kids die every day from gun violence in the US yet very few make the national news. Is there any way to stop Americans becoming inured to the bloodshed? The enraging, incredibly sad and sometimes peculiarly funny stories of ten kids on one unremarkable Saturday attempt to change that trend.

(Helen Lewis, Stephen Bush, Gary Younge).

You can subscribe to the podcast through iTunes here or with this RSS feed: http://rss.acast.com/newstatesman, or listen using the player below.

Want to give us feedback on our podcast, or have an idea for something we should cover?

Visit newstatesman.com/podcast for more details and how to contact us.