THE Government’s mortgage guarantee scheme was plunged into confusion tonight amid claims it could be used to buy second homes.
Housing minister Mark Prisk flatly denied the initiative could be exploited by people purchasing extra properties during an interview this lunchtime.
He insisted applicants would have to provide a legal undertaking that they had sold their existing home.
However, within hours Treasury sources were clarifying the remarks, suggesting Mr Prisk had only been referring to the “equity loan” element of Help to Buy.
The Government is still working out details of the mortgage guarantee element with the industry before it launches next January, they added.
The mixed messages came after George Osborne repeatedly ducked the issue in a tour of television and radio studios following his Budget yesterday.
The Chancellor was also hit with warnings from Labour and the Tory backbenches that the £12 billion policy would merely drive up house prices rather than kick-start construction.
The “equity loan'' part of Help to Buy is an extension of the existing First Buy scheme.
New or existing homeowners will need to raise a deposit of 5% of the value of the property they want to buy, but can borrow a further 20% from the Government on an interest-free basis. The biggest loan available will be £120,000.
The mortgage guarantee element will be available for all types of housing stock from January. The Government will guarantee up to 15% of a mortgage, allowing people with 5% deposits access to lending.
Speaking on BBC Radio 4’s World at One, Mr Prisk stated that he was referring to both schemes.
“Ed Balls is claiming that somehow you can get a loan under the Help to Buy scheme for your second home,” he said. “Let’s be clear, that is not the case.
“As with the current schemes, you would first have to divest your existing property prior to being able to proceed with any Help to Buy sale. This is about family homes. It is not about second homes.”