In a scathing review of the government’s Help to Buy Scheme the committee concluded that in the long term there may be an effect on housing supply.
Andrew Tyrie, chairman of the Treasury Select Committee, said: “If the government’s priority was housing supply, its housing measures should have concentrated there.”
The committee described George Osborne’s housing as “work in progress which may have a number of unintended consequences”.
The inquiry also considered the role the taxpayer was expected to play as guarantor.
The Chancellor said that expected losses under the scheme will be covered by the commercial fee charged to participating lenders.
But as yet no details of the proposed level of the fee have been published or any details of how it will be structured in practice are available and a date has not been set.
Tyrire said: “We believe that the government will find it extremely difficult to price the fee in such a way that sharply curtails Exchequer risk.”
 And he added: “The mortgage guarantee scheme also makes the government an active player in the mortgage market. The committee is concerned that the Treasury now has a financial interest in maintaining house prices to limit losses to the taxpayer.”
 The concern is that if mortgage lenders begin to exercise reduced levels of forbearance, repossessions may rise and house prices subsequently lower than they would otherwise be. If this happened, and unless this risk was fully priced into the fee, then the Treasury could end up facing large losses on those mortgages it has guaranteed.
As a result the committee has posed a number of questions to the government in relation to the unintended consequences it perceives the scheme will have which it expects the government to answer in its response to this report.
