The boss of state-backed lender Lloyds has warned that the Government’s Help to Buy scheme risks creating a dangerous house price bubble unless it is matched with a boost in housebuilding.
In the latest high-profile warning over the scheme, Antonio Horta-Osorio called for relaxed planning and building rules and more social housing projects so that rising mortgage approvals do not drive up house prices.
The Halifax owner is a major lender under Help to Buy, which was recently extended to include a Government guarantee on high-risk mortgages, allowing people to buy a home with a deposit of just 5%.
Mr Horta-Osorio said: “It is important that planning permits, building authorisations and social housing projects are (liberalised) so that the increase in (mortgage) transactions does not lead to a substantial increase in house prices.”
Lloyds’ chief executive said the initiative needs “tweaking” to avoid overheating the market in the south east of England.
He said: “The scheme should be focused outside London and the South East. (In the rest of the country) you have nothing close to a housing bubble.”
The warning came as the boss of Britain’s bad bank said Help to Buy could speed up the repayment of its £42 billion taxpayer loan by lifting house prices.
Richard Banks, who runs UK Asset Resolution, which manages the loans of failed lenders Northern Rock and Bradford & Bingley, said this could help lift customers out of negative equity.