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Affordable homes shortage: Government reveals plans Housing: David Cameron vows to 'get Britain building'
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Plans to allow first-time buyers of new homes to borrow up to 95% of their value, with the government underwriting part of the risk, have been unveiled. First-time buyers of new homes will be able to borrow up to 95% of their value as part of plans David Cameron says will help get "Britain building again".
They are part of a scheme to deal with an acute shortage of affordable homes and people unable to get mortgages. The mortgage indemnity scheme, in which government will underwrite part of the risk, could help up to 100,000 people.
It includes a £400m fund which aims to kick-start schemes in England which are ready but lack necessary finance. The prime minister said it was part of a wider strategy to deal with an acute shortage of affordable homes and stalled housing projects in England.
Ministers said the plans would "unstick" the market but Labour said they were "rather small beer". Labour said it was "small beer" and did not compensate for earlier cuts.
'Shovel-ready projects' 'Get building'
Building more homes has been earmarked as one of the government's economic priorities. Building more homes is one of the government's economic priorities, with the number of new ones being built at its lowest level since World War II, and with rents and prices remaining high while mortgage lending is restricted.
The number of new homes being built is at the lowest level since World War II, rents and prices remain high and mortgage lending is restricted, the BBC's home editor Mark Easton says. At the heart of the coalition's approach is a mortgage indemnity scheme which will enable first-time buyers and others to borrow up to 95% of the value of newly built homes, supported by government guarantees.
Just 121,200 new homes were made available in 2010-11, 6% fewer than the previous year. Addressing the CBI's annual conference in London, Mr Cameron said it was not his aim to create "another borrowing boom" but to help the many people who could not afford huge deposits needed to buy properties.
Although the decline was not as sharp as in the previous year when the number of new builds and conversions fell by 23%, Labour say the government has failed to get a grip on the problem in its first year in power, and the situation has got worse in some parts of the country. "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."
In an attempt to stop this decline, ministers are to intervene to support "shovel-ready" building projects that have been delayed by funding problems. "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."
A "Get Britain Building Fund" will see developers compete for funding to take forward projects which meet the right criteria, among them a commitment to affordable homes. Ministers will also intervene to support building projects which have been approved but delayed by funding problems.
This initiative will begin in July and aims to facilitate 16,000 new homes and up to 32,000 jobs. A "Get Britain Building Fund" will see developers compete for £400m in funding to take forward "shovel-ready" projects which meet the right criteria, among them a commitment to affordable homes.
This initiative will begin in July and aims to lead to 16,000 new homes being built, providing work for 32,000 people.
It is hoped that about 450,000 mainly affordable homes will be built by 2015, many of them on publicly-owned brownfield sites, although the government is not setting any specific targets.It is hoped that about 450,000 mainly affordable homes will be built by 2015, many of them on publicly-owned brownfield sites, although the government is not setting any specific targets.
Empty properties will be brought back into residential use and new providers will be encouraged to enter the social housing market, say ministers. Other parts of the strategy include empty properties being brought back into residential use and new providers being encouraged to enter the social housing market.
To help potential buyers, tenants of social housing are likely to get the right to buy their home - a hallmark of the Thatcher government in the 1980s - for as little as half the market price and the money will then be used to build more affordable housing. To help potential buyers, tenants of social housing are to get the right to buy their home - a hallmark of the Thatcher government in the 1980s - for as little as half the market price.
For every house sold off this way, the government is pledging to build a new one. The money will then be used to build more affordable housing, with ministers saying they will build a new home for every home sold off in this way.
A mortgage indemnity scheme will be introduced so that first-time buyers can borrow up to 95% of the value of new build homes - with government underwriting part of the risk.
Housing minister Grant Shapps told BBC Breakfast the government was not seeking to "pump up" the housing market but to help people get on the property ladder in a "responsible" way.
"What we want to do is to make it easier for first-time buyers who say the biggest problem is the amount of deposit we have to get together," he said. "This is the biggest blockage."
In the foreword to the government's new strategy, David Cameron and his deputy Nick Clegg say the UK is facing a situation where "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," they write, adding that this is doing damage to the economy and society.
The House Builders Federation said the lack of mortgage availability since the 2008 banking crisis had been "the biggest constraint" on new homes and the indemnity scheme would help to address this.The House Builders Federation said the lack of mortgage availability since the 2008 banking crisis had been "the biggest constraint" on new homes and the indemnity scheme would help to address this.
"In recent years, many people have been unable to realise their dreams of buying a home because of the huge deposits required by lenders," its executive chairman Stewart Baseley said."In recent years, many people have been unable to realise their dreams of buying a home because of the huge deposits required by lenders," its executive chairman Stewart Baseley said.
"This scheme will be allow people to buy their new home on realistic terms and help, in particular, hard-pressed first time buyers.""This scheme will be allow people to buy their new home on realistic terms and help, in particular, hard-pressed first time buyers."
'Mismanagement'
But Labour said the government's "mismanagement" of the economy was holding back housebuilding.But Labour said the government's "mismanagement" of the economy was holding back housebuilding.
"I am afraid it is rather small beer in its scale," said chancellor Ed Balls said. "It is a £400m boost, but George Osborne last year announced a £4bn cut in housing spending." "I am afraid it is rather small beer in its scale," shadow chancellor Ed Balls said. "It is a £400m boost, but George Osborne last year announced a £4bn cut in housing spending."
The opposition have urged ministers to levy a £2bn tax on bank bonuses to pay for 25,000 new homes and 100,000 new construction jobs for young people, as part of their five-point plan for boosting growth.The opposition have urged ministers to levy a £2bn tax on bank bonuses to pay for 25,000 new homes and 100,000 new construction jobs for young people, as part of their five-point plan for boosting growth.
"I think most people would say that with bank bonuses still very high repeating that tax for £2bn and using it in that way would be a much better way to spend the money and a good boost to jobs and housing.""I think most people would say that with bank bonuses still very high repeating that tax for £2bn and using it in that way would be a much better way to spend the money and a good boost to jobs and housing."
Just 121,200 new homes were made available in 2010-11, 6% fewer than the previous year.
Although the decline was not as sharp as in the previous year when the number of new builds and conversions fell by 23%, Labour say the government has failed to get a grip on the problem in its first year in power, and the situation has got worse in some parts of the country.