As George Osborne prepares his Autumn Budget this week, we take a look at what it could mean for the UK’s housing market.

The Autumn Budget will see “curbs on the housing market” according to the Daily Telegraph, as Chancellor George Osborne seeks to avoid a housing bubble.

Despite a recent upturn for the housing market, Mr. Osborne issued a warning to the BBC that “the job is not yet done because we have got to make sure we go on taking the difficult decisions to secure the recovery.”

“Responsible Economy”

The budget is going to be geared towards creating “a responsible economy.”

Last week saw the Bank of England withdraw its support for mortgage loans. The head of the Bank, Mark Carney, announced plans to end loans for mortgages via the Funding for Lending Scheme (FLS), believing that there was a higher risk of instability if house prices rose rapidly.

The FLS allows banks to lend money direct from the Bank of England, on the proviso that the money is then lent to individuals or businesses, to help boost lending and grow the economy.

Since it was launched over a year ago, the FLS had lent £23.1bn to banks and mortgage providers. The highest lenders had been Lloyds Banking and Nationwide.

The Bank of England, in a bid to curb lending habits, has modified the scheme to exclude individuals. According to the BBC, the Bank believed that “mortgage lending had picked up sufficiently and no longer needed special support.”

Mr. Carney wanted to see “more support for business lending rather than for lending to households.”

Learning From Mistakes

Mr. Osborne said that such an attitude was sensible and necessary, to prevent a housing bubble from developing. In an interview with the BBC, the chancellor said, the government wanted to “learn from the mistakes of the past and not see a re-emergence of those problems in the financial system that brought this country to its knees.”

The Bank of England’s stance is unlikely to affect the government’s Help to Buy Scheme, as Mr. Carney made clear in a letter to Treasury select committee chairman Andrew Tyrie, published last week. Carney wrote, that whilst the Bank of England could be called upon to advise the government, at no point would it have the “power to require the Treasury to vary the terms of, or close, the Help to Buy scheme.” This was extremely welcome news to Tyrie, who said the letter brought “some much needed clarity to the government’s Help to Buy Scheme.”

It’s also good news for the many first time buyers who are eager to use the scheme to get a foot on the property ladder.

“Give Us The Tools”

Mr. Osborne’s attitude will be rather less welcomed by members of the Chartered Institute for Housing, who had called on the Chancellor to support new housing within his budget. Grania Long, the CIH chief executive, had argued that the housing market “would be able to contribute much more to meeting our national supply challenge if government would only give them the tools.”

With Mr. Osborne due to announce his budget on Thursday 5th December, it remains to be seen what impact it will have on the housing industry. Make sure you visit our site again, to see what the full impact of the budget is.