The Conservatives are due to announce their controversial new Help to Buy Scheme at their annual party conference this week. Although the Prime Minister is keen to see more young people on the property ladder, his Labour opponents believe that the real problem is the lack of new houses.

This week, at the party conference in Manchester, the Conservatives party will announce the launch of the Help to Buy scheme, a new government policy, which it is hoped, will open up the housing market for first time buyers.

Yesterday, PM David Cameron told the BBC that the housing market is “recovering, but from a low base.” However, in the current economic climate, Mr Cameron continued, “the average family can’t afford the average house, and that’s not a problem in our housing market, it’s a problem with our mortgage market.”

The new scheme will enable people to buy any home worth up to £600,000 with just a 5% mortgage deposit. The Government will then guarantee the next 15% of the mortgage. It’s a scheme which is particularly geared towards young, first time buyers whose “aspirations to get on the housing ladder are being trashed,” according to Mr. Cameron.

As well as being backed and regulated by the Bank of England, mortgage-lenders Halifax, RBS and Nat West have all signed up to the policy.
Earlier Launch Than Planned

Help to Buy had been due to launch in January, but the Conservatives now plan to bring applications forward to next week, a whole 3 months earlier than initially planned. Loans taken out under the scheme however will not be paid out until 1st January.

Already the policy has faced criticism from a number of sources, particularly from the Labour Party who find themselves at the top of the opinion polls following Ed Milliband’s announcement last week that Labour would freeze energy prices and increase corporation tax.
More Houses, Not Mortgage Schemes?

Shadow Treasury Minister Chris Leslie, argued that the Government should be doing more to help the house builders, rather than house buyers. He told the BBC;

“Where is the help to build in the government’s strategy? … All the government’s scheme is going to do is help get bigger and bigger mortgage borrowing, but what about the affordability of those prices?”

Shadow Chancellor Ed Balls repeated Labour’s belief that the answer to the problem lay in building more houses, rather than helping with mortgage payments. He said, unless David Cameron “acts now to build more affordable homes…then soaring prices risk making it even harder for first time buyers to get on the housing ladder.”

The fear is that the scheme will lead to a housing bubble, which will worsen affordability issues for millions of people across the country.
“No Housing Bubble”

The Prime Minister however, was in buoyant mood when interviewed on the Andrew Marr show yesterday, dismissing fears of a housing bubble. “Talk of a housing bubble to people here in Manchester or Salford, and they would literally laugh in your face.”

The scheme will remain open for three years, and will be available for £12bn of guarantees on up to £130bn of mortgages. Check out details of the policy by visiting the Government’s website here.