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Liberal Democrat Business Secretary Vince Cable has warned that a regionalised housing policy and Help to Buy scheme are needed to address the issue of some areas of the country’s property markets “overheating”.

Critics of the Help to Buy scheme say it is fuelling rising house prices, with some areas experiencing an annual rise in property prices of between 10% and 18% cent.

Mr Cable was speaking to reporters from the Western Mail newspaper during the Welsh Liberal Democrat Party’s Spring Conference in Newport, South Wales – and said that Cardiff and other major towns and cities in Wales could experience the same escalating property prices as seen recently in London and Manchester.

Mr Cable has already warned that the UK may be facing a property crash even worse than the one which occurred in 2008 after the banking crisis led to the credit crunch. After 2008, many property developers stopped building – and even left projects already started unfinished.

The mortgage market also became a victim of the credit crunch, with 100% mortgages – popular with first-time buyers – taken off the market completely by lenders.

The government’s Help to Buy scheme was a response to the difficulties faced by first-time buyers and families trying to buy a larger home.

The government underwrites part of the mortgage – up to15% – and first-time buyers can buy a property up to £600,000 with a deposit of just 5%.

However, the speed at which property prices have been rising over the last year means that homebuyers are still encountering difficulty in finding affordable homes to buy.

Mr Cable said that middle-income earners are now unable to get on the property ladder because of the substantial rise in house prices across the country over the last year.

The Business Secretary told the Western Mail that the government needed to “tailor” its house building schemes to areas where the property market was more depressed.

Mr Cable said that the extremes of the property market across the country were in London – where prices continue to spiral upwards – and Northern Ireland, where the property market remains more depressed than the rest of the UK.

Mr Cable said that prices in Northern Ireland had “fallen massively because the bottom fell out and they were caught out when the Irish property bubble collapsed”.

He added that there was an argument for “differentiating” between housing markets across the country.

“That would be one way of dealing with the Help to Buy issue,” said Mr Cable.

“The concept behind it was in many ways a perfectly sensible and attractive one: Part One of Help to Buy was actually supporting new building – which as most of the scheme is actually supporting new-build, nobody can possibly object to that.

“The controversial bit is the mortgage guarantee, which is so far operating on a very small scale indeed, but has the potential for driving up prices.

“I actually looked at the numbers and actually relatively few are in London and the southeast. In fact, Scotland is the biggest recipient as far as I remember,” said Mr Cable.

“So in practice, you’re already getting regional differentiation on that – and it would be a sensible way to proceed,” he added.

Duncan Lewis Housing Solicitors

Duncan Lewis housing solicitors can advise on issues such as debt and mortgage repossession, as well as Landlord & Tenant issues, Local Authority property and disrepair of rental property.

Duncan Lewis is also a leading firm of Legal Aid solicitors.

For expert advice on housing law, contact Duncan Lewis housing solicitors on 020 7923 4020.