The Government is planning to pump an extra £10 billion into the Help to Buy scheme in an attempt to woo younger voters.
However, the revival of the scheme has drawn widespread criticism, with experts saying it will increase demand and push up house prices.
The extra funding will help 135,000 buyers with a deposit of as little as 5% to get a mortgage on a newly-built home.
The Adam Smith Institute compared the revival of the scheme to “throwing petrol onto a bonfire”.
Sam Bowman, executive director of the Adam Smith Institute, said: “This will do nothing to increase the supply of housing, an issue we’ve looked at in detail recently, but could increase demand and so exacerbate the housing crisis it’s targeting.
“The property market is totally dysfunctional because supply is so tightly constrained by planning rules, and adding more demand without improving the supply of houses is just going to raise house prices and make homes more unaffordable for people who don’t qualify for the Help to Buy subsidy.
“To improve the housing market you need to change the rules of the game, so that damaged parts of the green belt can be built on, so we can have more dense and efficient development of existing urban areas, and so that locals benefit from new developments near them. Reviving Help to Buy is an astonishingly ill-judged move that may prove economically and politically disastrous for the government.”
Polly Neate, CEO of Shelter, said: “Extending Help to Buy is the wrong priority at a time when over a million renters are struggling with crippling housing costs.
“Help to Buy has barely helped the first-time buyers it is targeted at and has done nothing to help those worst affected by our broken housing market and those at risk of homelessness. Moreover it has increased house prices and propped up a speculative development model in need of reform.”
Government figures show that home ownership fell to 62.9% in 2016 – the lowest recorded since 1985.
According to the latest English Housing Survey, between 2006 to 2016 the number of young adults aged 25-34 renting leapt from 24% to 46%
Meanwhile, home ownership rates amongst those aged 35-44 fell from 74% to just 56% over the same time.
The Help to Buy scheme has helped over 200,000 people buy a home since its introduction four years ago.
According to the Home Builders Federation, the scheme now accounts for one in 12 of all households making their first steps on the housing ladder.
Demand for new homes from the Help to Buy scheme means permission for 321,982 new homes was granted in the last 12 months – the highest for a 12-month period since 2006.
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