Uproar over suggestions that British taxpayer money could be used to back the mortgages of rich overseas property buyers could dampen enthusiasm for the Help to Buy scheme in the UK. It has emerged that the multi-billion pound plan, heralded by many as the saviour of the property market, may be exploited to enable foreigners to purchase homes in the country.
David Cameron has refused to deny that Help to Buy could be used in this way, but this is the latest raft of criticism since the policy was announced to much initial jubilation in Budget 2013. Many politicians have claimed the scheme could be used by the rich to finance second homes, while experts maintain Help to Buy will inflate property prices, potentially causing a bubble to develop.
Labour MP Ann McKechin is now demanding to know if foreign buyers will be able to benefit from the scheme. After posing the question in the Commons, Mr Cameron told the opposition member: "The Chancellor will set out details of this in the announcements he plans to make." However, it is believed that legally the government will be unable block buyers from EU member states from making use of the state-backed mortgages.
The Daily Mail reported that Mrs McKechin told the Commons: "I have serious concerns about these proposals and believe they will not assist the property market for ordinary people. Both in London and across the south-east, foreign ownership of land and property has led to above inflation increases in values which risk pumping up another property bubble."
Consequently, people on modest incomes in the south of England could continue to struggle to buy a home, despite the introduction of Help to Buy. However, the influence the scheme has had on the property sector thus far cannot be denied. Grainne Gilmore, head of UK residential research at Knight Frank, explained that optimism that the scheme will have a positive impact on house price movements remained strong in May. In fact, the Knight Frank/Markit House Price Sentiment Index (HPSI) showed 13.5 per cent of homeowners thought the value of their home increased during the past month. This is the highest proportion since June 2010.
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