The 21st November saw the Government release their Affordable Housing Plan – a set of measures designed to tackle Britain’s problems of undersupply and overpricing in the housing market which constitutes their main step towards solving the housing crisis.
The plan includes a groundbreaking new mortgage indemnity scheme, whereby buyers of new homes will be able to borrow up to 95% of the value of their new property, with the government underwriting part of the risk to lenders.
The Government is hoping that the new scheme could help around 100,000 first time buyers get on the ladder.
At the CBI’s annual conference in London, David Cameron said it was not his aim to create “another borrowing boom”, but to help the many people who could not afford the deposit needed to buy a property.
“When first-time buyers on a good salary cannot get a reasonable mortgage, the whole market grinds to a halt,” he said.
“And that ricochets around the economy, affecting builders, retailers, plumbers – all the people that depend on a housing market that is moving.
“If we don’t do something like this we are not going to get this vital market moving… We will restart the housing market and get Britain building again.”
The measures follow a poor year for house building, with figures at their lowest levels since WWII. Just 121,200 new homes were made available in 2010-11, half of what ministers say is needed to satisfy demand, but moves are being made towards stimulating house building.
An estimated 130,000 construction projects have stalled across the country due to lack of finance, a problem which the Government is hoping to rectify with a “Get Britain Building Fund” of £400m which will see companies competing for a slice of the money to take forward “Shovel ready” projects. The scheme aims to produce another 16,000 homes and work for 32,000 people.
The plans, however, have not been met with wholesale approval, even from industry experts. The National Housing Federation, for example, immediately responded to the Government announcements by stating:
“The Government deserves credit for recognising the huge economic and social value of investing in house-building, but the announcement today is a real missed opportunity.
“Increasing the supply of new homes is a key part of tackling the housing crisis – but as is affordability and it’s vital that we build homes for rent and sale for people on modest incomes.
“A public investment of £1bn – matched by £8bn from housing associations – would build 66,000 shared ownership homes for people on low to middle incomes, create 400,000 jobs and in doing so save the taxpayer £700m in job seekers not to mention the added savings from housing benefit and increased tax revenues.”