Everyone who owns a property, hopes to profit from housing and the government seem happy to see more and more money pumped into houses in order to kick-start a market recovery.

One of the methods set up to do this is the government's Help to Buy scheme. This scheme offers government backed equity loans to home buyers and mortgage guarantees to lenders in the hope that more people will be able to borrow to buy their own homes.

But the Adam Smith Institute claims that this will just create a bigger house price bubble and risk tax payers' money in the process.

And it is hard to argue with this when you consider that the scheme will generate a larger demand with no mechanism to increase the supply of housing other than hoping that market forces will be able to fight through all the planning rules and regulations to generate a housebuilding surge.

The Adam Smith Institute paper, 'Burning down the house', claims that Help to Buy will:

* drive up house prices by increasing demand for but not supply of housing – it will not improve overall access

* risk taxpayers' money with no guarantee of a return

* by subsidising homebuyers and introducing the possibility of socialising lender losses it risks the recreation of the perverse incentives that led to the 2000s-era US housing bubble

This will price the poor out even more says the report and add further to inequality in the UK.

The Institute would rather see 'hostile' regulations removed to allow housing to be built more easily and cheaply. It points out that only 10 percent of the land is built on with a large fraction of that being gardens. If we want to control runaway house prices and give first-timers a chance to get on the ladder, we need to allow more houses to be built it says.

"It is crazy for the government to stoke demand even more without addressing supply and claim that this will help the housing market," said the Institute's Research Director Sam Bowman. "Making taxpayer-subsidised handouts to homebuyers will only drive further house prices up, risking a bubble, improving access for a select few but making housing even more unaffordable for most people."

"On the other hand, radical liberalisation of the planning system has the potential to drive massive economic growth, drastically reduce housing costs for the badly-off, and give millions more a chance to own property of their own. "

"Deregulation is a way of addressing the housing supply shortage while avoiding recourse to public fiscal intervention,” commented Preston Byrne, the Institute's Legal Fellow. "If the Government is serious about finding a long-term solution to the housing crisis, it's time to take a hard look in the mirror and examine the role existing planning regimes – both local and national – play in regulating and inhibiting new housing construction.

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