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Osborne moves to quell property boom concerns

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Britain's Chancellor of the Exchequer George Osborne makes a speech on the present state of the UK economy at a construction site of offices and 'affordable homes' in east London on September 9, 2013POOL/AFP/File

Chancellor George Osborne has moved to curb fears that the government's Help to Buy scheme could fuel a housing boom, by asking the Bank of England to carry out annual reviews.

The scheme is designed to help buyers who might be unable to raise a deposit by providing taxpayer insurance for up to 15 percent of a mortgage on houses worth up to ??600,000, freeing up bank lending.

The Bank's Financial Policy Committee (FPC) will be able to advise Osborne to reduce the value of homes against which the government will guarantee the mortgage if the market shows signs of overheating.

The finance ministry could also raise the fees it charges lenders for the guarantees if it needs to dampen demands for cheap loans.

Business Secretary Vince Cable has said the scheme could result an asset price bubble.

A Treasury spokesman said on Friday, "The Chancellor has asked the FPC to work with him every September, starting next year, to assess the ongoing impact of the Help to Buy scheme.

"Following that annual assessment he has proposed that the FPC advise him on whether the key parameters of the scheme -- the price cap and the fees charged to lenders -- remain appropriate.

"At the end of the scheme's three-year life, if a future government proposes to extend the scheme, the FPC will have to give its agreement."