UK must keep building out of credit crunch

Tuesday, 24 February 2009 9:46 AM

A group of influential MPs are calling on the government maintain its building programme through the recession.

A report from the Communities and Local Government select committee is calling for the government to stick by its building targets of a total of three million new homes to be built by 2020, with two million of them by 2016.

The credit crisis, however, has halted building in the UK - with only 16,310 homes started in the last three months of 2008 - as the mortgage crunch and falling house prices means developers are not seeing buyers for new properties.

To reach the target, a total of 240,000 new homes per year are needed to be built.

The select committee is pushing the government to ensure more social housing is included in new building.

Phyllis Starkey, chair of the committee, said: "The credit crunch has not reduced the numbers of households needing new housing, nor does it affect the need to address years of undersupply.

"The message which we received from witnesses during our inquiry was clear: the steps the government is taking are welcome, but further action is needed if the government is to have a chance of meeting its targets for home building and achieving the goal of a decent home for all."

The report also raised problems over rolling forward spending from future budgets "with apparently no idea how it is going to restore that money at a later date".

In response the committee is urging the Department for Communities and Local Government (DCLG) pressure the Treasury to bring forward measures to restart the mortgage market, and greater purchase of existing homes as social housing.

The MPs are also calling on greater monitoring of repossessions and lenders' behaviour.

James Rowlands, at the Royal Institution of Chartered Surveyors (Rics), said low levels of housebuilding needed to be dealt with alongside boosting mortgage lending.

"Current market conditions mean that the number of homes being built has fallen dramatically, as housebuilders are reluctant to develop if homes will not sell," he said.

"As a result, it is likely that the number of homes built in 2009 will be significantly below 80,000, well short of the government's target of 240,000."

Housing minister Margaret Beckett responded to the report claiming the government was "constantly looking at what more we can do to keep housing supply going in the current climate" and that housing targets must stand.

"That is why we are bringing forward spending and buying unsold homes, to deliver thousands more affordable homes sooner and help protect jobs in the construction industry. At the same time, we have put in the place in the most comprehensive package ever to help families at risk of repossession."

She added: "As we've already made clear, now is not the time to row back on our house building targets.

"Despite the current difficulties, long term demand for housing is not going to go away with an ageing and growing population. With an overall £8 billion programme in place, we are committed to substantial increases in social housing over the longer term."

Daniel Barnes

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