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Government to act to mend ‘broken housing market’

The Government has launched a new housing strategy which it claims will Get Britain Building again by tackling the housing shortage, boosting the economy and giving people the chance to get on the housing ladder.

Government to act to mend 'broken housing market'

The Prime Minister, David Cameron, announced the plans at the CBI Conference in London and said that the Government has inherited a “broken housing market.

The plans aim to drive up the level of housebuilding, he said. “The Strategy will break the current cycle in which lenders won’t lend, builders can’t build and buyers can’t buy. We’ll be making it easier for people to secure mortgages on new homes, help people get on the property ladder, address unfairness in social housing and ensure homes that have been left empty for years are lived in once again.”

At the heart of the strategy is a new build indemnity scheme so buyers only need a 5% deposit, with security for the 95% loan provided by the Government and housebuilders. Through the scheme lenders will be encouraged to offer mortgages with smaller deposits, increasing demand for new homes and giving a boost to the housing market.

The Government also plans to increase the Right to Buy discounts for council tenants to up to 50%, with the receipts used to fund new affordable homes for rent on a ‘one for one’ basis. Housing Minister Grant Shapps said: “So every home sold through Right to Buy will mean a new one built to take its place.”

Where there are existing building sites that have stalled, a £400m Get Britain Building funding pot will enable housebuilders to restart construction, helping to deliver up to 16,000 new homes on sites that already have planning permission, but have been shut down because of economic conditions.

The new support on offer will also benefit self builders, with £30 million additional funding to support provision of short term project finance on a repayable basis.

The strategy will also help to bring empty homes back into use. Cameron said the fact that for years so little has been done to bring the nation’s growing number of empty homes back into use is a “national scandal”.

Housing Associations and councils will be able to apply for part of £100m of Government funding to bring empty homes that blight neighbourhoods back into use. Government is also announcing £50 million of further funding to tackle some of the worst concentrations of empty homes.

The schemes will be backed by cash rewards through the New Homes Bonus for councils bringing empty homes back into use, and many schemes will also have wider benefits such as providing excellent training opportunities for local people.

Other reforms set out in the strategy include:

  • transferring housing and planning powers from central government to councils and local people, so that they can shape development in their areas

  • replacing top down targets with powerful cash incentives through the New Homes Bonus, so instead of simply feeling the strain that new building projects place on existing services, communities have a reason to support new development

  • supporting private sector growth by reducing regulation and other burdens on house-builders

  • accelerating the release of public sector land with capacity to build up to 100,000 new homes by 2015, and support up to 200,000 construction and related jobs during development.
  • About Fiona Russell-Horne

    Group Managing Editor across the BMJ portfolio.

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