Taylor Scott International News
The Royal Institution of Chartered Surveyors (RICS) has welcomed a move to give further powers to the Bank of England to manage property’s role in the country’s economy. It said that the decision announced this week by the Chancellor of the Exchequer George Osborne is a responsible step when housing development is being heavily stimulated. But it warns that a ‘permanent’ Help to Buy scheme needs to be carefully considered. Whilst there is a commitment to annual scrutiny by the Financial Policy Committee, RICS has called for a concise and clear exit strategy for Help to Buy and believes existing schemes should be focused on those regions which are seeing least activity and development, and have the greatest housing need. Under the change the Bank's Financial Policy Committee (FPC) will make annual reviews of the scheme, starting next September. The committee had been due to make an assessment of Help to Buy only after its first three years of operation. Osborne believes that the recent recovery in parts of the housing market has raised questions about the impact of the scheme so he has given the Bank more control. The FPC will be able to modify parts of the scheme to keep it in check. The FPC will also be allowed to review the scheme and could reduce the £600,000 cap, so fewer homes are affected. The FPC could also make loans less attractive by recommending that the Treasury raises the fees paid by lenders for the guarantees. Help to Buy was originally launched to help buyers of new properties in England, with other schemes operating in Wales and Scotland. A second, potentially much bigger phase of the scheme is due to begin in January to assist buyers who might otherwise be unable to afford a down payment on a home. The scheme provides taxpayer insurance for up to 15% of a mortgage on houses worth up to £600,000, allowing banks to provide up to 95% mortgages at a reduced risk. The plan has been criticised by opposition politicians and private sector economists for risking pushing up house prices, which have since risen by around 10%. However, in its first assessment this week the Bank of England has given a clean bill of health to the Help to Buy mortgage guarantee scheme, saying it does not pose material risks to financial stability. It also said it was not to blame for prices risesas it only accounted for around 5% of mortgages and was most used in regions where house prices had risen least. 'The scheme does not appear to have been a material driver of (house price) growth. For example, take up of the scheme has been weak in London where house price growth has been strongest,' the FPC said, adding that mortgage lending standards had not deteriorated since the launch of Help to Buy, and house prices appeared to be cooling sooner than the FPC had expected when it last met in June and imposed caps on general… Taylor Scott International
Taylor Scott International, Taylor Scott
