Govt mortgage plan failing, say MPs

By Ian Dunt

The Treasury’s Asset-backed Guarantee Scheme (ABS) – a key plank of its efforts to get the mortgage markets moving again – is not working, according to an influential committee of MPs.
 
In a report published today, the communities and local government select committee also called on house builders to be able to sell the houses they build in a bid for the government to meet housing targets.
 
Dr Phyllis Starkey, chair of the committee, said: “House-builders simply will not build homes which they cannot sell.
 
“We welcome the additional investment the government has made in building homes for social rent and in low-cost home ownership. But this won’t on its own be enough to meet demand.”
 
The ABS had no chance of success, MPs found.
 
“In its current form the ABS is a leap that reaches across only half the chasm: impressive, but doomed to fail,” Dr Starkey said.
 
“If we are to meet house-building targets, then CLG ministers and senior officials must maintain pressure on the Treasury to bring forward new measures to get the mortgage markets moving.”
 
The committee lambasted the government for focusing exclusively on increasing ownership, and doing too little to help those living in rented accommodation
 
“For thirty years, government policy has focussed on promoting home ownership with insufficient attention given to the rented sectors,” Dr Starkey continued.
 
“We now need a vigorous debate to review this approach and formulate a more coherent vision to guide effective housing policy and investment into the future.”
 
The news comes on the same day that a Lloyds report suggested signs of economic recovery were increasing.