(Reuters) - Britain should more than halve the ceiling for its housing scheme for first-time buyers, before it begins distorting the market, the head of the Organisation for Economic Co-operation and Development (OECD) told the Times on Sunday.
Britain’s Chancellor of Exchequer George Osborne should slash the 600,000 pound limit for properties qualifying on the Help to Buy scheme, and start to scale back the mortgage subsidy scheme, the paper quoted OECD Secretary General Angel Gurria as saying.
Last week, UK ministers said nearly 40,000 people had benefited from the programme and used it to buy a house. However, critics of Help to Buy have long said the scheme looks designed to win support for the government ahead of elections in May 2015 and that it adds to the risks of a housing price bubble.
The Bank of England in June imposed its first limits on how much most people can borrow to buy a home, in a bid to curb increasing levels of debt and cool a rapid rise in house prices.
The Times quoted Gurria as saying that the government should lower the eligible house price limit to the national average, 262,000 pounds, and also begin the process of winding down the programme over about a year.
The UK treasury press office declined to comment and the OECD could not immediately be reached for comment.
The Bank is due to review the scheme next month, the daily said.
Reporting by Esha Vaish in Bangalore; Editing by Eric Walsh