In the week that several banks launched 95% loans under the second phase of the Help to Buy mortgage guarantee scheme, Builders Merchants Federation (BMF) managing director John Newcomb welcomed the government’s efforts to address the housing shortfall – but said they have to reach the right balance between demand and supply.

John Newcomb and Brett Amphlett were at the Conservative Party Conference to hear the Prime Minister announce the earlier start to the scheme, originally planned for next January.

Mr Newcomb said: “The second phase of the Help to Buy scheme relates to older, existing properties being bought and sold. The BMF sees this as important because the properties are more likely to be converted, extended or repaired. Merchants ought then to benefit from selling home improvement materials and products.

“Fortuitously, it coincides with the introduction of the BMF’s Trade Credit Finance Scheme, which will enable participating merchants to extend additional credit to local builders – allowing them to take full advantage of this increased refurbishment activity.”

Mr Newcomb also sounded a note of caution: “As a country, we are building fewer than half the number of homes needed to meet population, demographic and lifestyle changes. In Manchester, the mood was one of a Catch 22 situation. To get the economy moving again, construction needs to recover. But our industry will only recover if confidence returns and the economy keeps moving

“The last thing we want is a repeat of life before the 2008 crash – namely, a constrained housing supply that sends prices soaring, meaning homes become less and less affordable. That is in nobody’s long-term interest, and certainly not BMF members’.

“Vigilance and fine tuning of Help to Buy is crucial to maintain equilibrium if we are to avoid a house price bubble. As with Quantitative Easing, Help to Buy needs to be handled very carefully.”