New 400m housing initiative to ‘unlock housing market’
Monday, 21 November 2011 9:25 AM
David Cameron today unveiled a new £400m initiative which aims to "unlock" the housing market.
The prime minister announced the new scheme, which he said will "get Britain building again" and is set to start in July.
It aims to provide 16,000 new homes and create 32,000 jobs in England.
Buyers of new homes will be offered the ability to borrow 95 per cent of a property's value with the government underwriting some of the risk, in what is known as a mortgage indemnity scheme.
Labour have dismissed the government's initiative as "small beer", following months of criticism of the government over the shortage of affordable homes.
Six per cent less new homes were made available in 2010-11, although the previous year saw a 23 per cent drop in new builds and conversions.
The number of new homes being built is now at the lowest level since World War II.
Rising rents and restrictive mortgage lending conditions are strangling the market, resulting in the average age of first time buyers continuing to rise, currently standing at an estimated 43.
Lenders are demanding around 20 per cent of the value of a property in a deposit from first time buyers and the government scheme is aimed at reducing this by shifting the loan-to-value ratio.
Last week Jack Dromey, Labour's shadow housing minister, attacked the government's housing policies and said they were "hurting but not working".
He said: "In September last year, Grant Shapps [housing minister] said building more homes is the gold standard upon which the government would be judged. Well, the judgement is in and the government is failing."
In a foreword to the government's new housing strategy, Cameron and deputy prime minister Nick Clegg said: "By the time we came to office, house building rates had reached lows not seen in peace time since the 1920s.
"The economic and social consequences of this failure have affected millions: costing jobs; forcing growing families to live in cramped conditions; leaving young people without much hope that they will ever own a home of their own.
"These problems – entrenched over decades – have deepened over the past few years. The housing market is one of the biggest victims of the credit crunch: lenders won't lend, so builders can't build and buyers can't buy.
"That lack of confidence is visible in derelict building sites and endless For Sale signs. It is doing huge damage to our economy and our society, so it is right for government to step in and take bold action to unblock the market.
"With this strategy we will unlock the housing market, get Britain building again, and give many more people the satisfaction and security that comes from stepping over their own threshold."
An extra £50m will also be provided on top of the £100m in this year's budget aimed at refurbishing empty homes.
Increasing attention has been paid to the number of homes left empty over recent months and Andrew Stunell, Liberal Democrat communities minister, said that solving the problem of empty properties could provide two years of housing supply.
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