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News - 20 June 2014

MPs Warn Of 'Taxpayer Risks'

 The Public Accounts Committee have said that the government's Help To Buy scheme, designed to boost the housing market, creates "medium and long-term risks to the taxpayer", and has questioned whether it represented value for money for the taxpayer.

 
The Public Accounts Committee (PAC) said the policy - under which Government equity loans finance as much as 20% of the purchase price of homes worth up to £600,000 - risks creating a £10bn portfolio that will impose a "heavy administrative burden" for decades.
 
Tonmoy Kumar, Manager of the Accounts Department of ABDS comments:
“Help To Buy is aimed at people who can afford a mortgage but are struggling to get on the housing ladder because they are unable to raise a suitable deposit. Under the scheme, the government offers buyers of a newly-built home a loan worth 20% of the purchase price, provided they have a deposit of 5% and the property costs less than £600,000.
 
While the spending watchdog said the scheme was introduced smoothly and had helped 13,000 home buyers within nine months of its creation, it accused the Department for Communities and Local Government (DCLG) of violating Treasury guidelines by failing to carry out any assessment of alternative options.
 
Margaret Hodge, the Labour chair of the committee, said that overseeing a portfolio of loans was new territory for the government and required "careful management".
 
"There are also more immediate risks, particularly the fact that some buyers have accessed the scheme with deposits of less than 5%, which increases taxpayers' exposure to risk," she said.
 
The PAC urged DCLG to assess the scheme's effectiveness in regional and local markets - finding that while it had proved popular in northern England and parts of the Midlands it had little impact in the South East and London where demand for property was at its highest.
 
Responding to the findings, housing minister Kris Hopkins insisted it was supporting the economy.
 
He said: "The Government completely rejects this report which sacrifices thorough analysis of Help to Buy in favour of a grandstanding headline. The Help to Buy Equity Loan scheme is building more homes and supporting the economy - in fact we estimate the wider economic benefits could be as much as £1.8bn.”
 
If you need any help and advice for your business on the implications of central and local Government Funding initiatives and the construction industry, contact Lavinia Newman, Stuart Coleman or Tonmoy Kumar to discuss how ABDS can help
 
ABDS Chartered Certified Accountants of Southampton.
Tel: 023 8083 6900 E-mail: abds@netaccountants.net
 
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Great with people  
Clear and precise with advice
Timely and cost effective
In touch with issues that face our clients
Mindful of our client’s long term strategic goals
 
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