A 2013 budget initiative aimed at helping people get on the housing ladder has caused a row to erupt over whether it could be used to fund the purchase of second homes.
The initiative is designed to assist people with low deposits purchasing homes. However there are now fears the initiative could be used by the wealthy to help fund the purchase of additional properties.
In an attempt to defuse the row, Housing Minister (Mark Prisk) said applicants would have to “divest” their existing properties to be eligible for the initiative. (This means sell their existing home in plain English)
There is confusion about how this would work in practice, because people would not usually be able to sell their existing home before starting to buy a new property.
Meanwhile, Conservative MP Kwasi Kwarteng expressed concern that flooding the mortgage market would increase house prices because there would still be little housing stock.
The final details have yet to be worked out but it is planned to facilitate £130 billion of home loans over three years.
Chancellor George Osborne is no stranger to budget day controversy. In the 2012 budget, he announced a reduction of income tax for the highest UK earners from 50% to 45%. The new 45% tax rate will take affect from 6 April 2013.
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