The industry has offered the government’s housing strategy a mixed reception, welcoming a £400m Get Britain Building scheme, but criticising a lack of detail and support for SMEs.
As expected, a mortgage indemnity guarantee scheme will reduce the level of deposit first time buyers must raise to around five per cent.
The move could boost housing supply by as much as 15 per cent in its first full year, according to residential landlord Grainger plc.
However the strategy contains no figures on the number of new homes that will be built to replace those sold under proposed changes to social housing tenants’ right to buy
The government will also consult on proposals to allow developers to require local authorities reconsider S106 agreements in place prior to April 2010.
Other measures announced today include a £30m self-build Custom Homes programme while schemes already being pursued by government as part of the strategy include the FirstBuy equity loan scheme where government and housebuilders are providing around £400 million to help almost 10,500 first time buyers purchase a new build home in England, with the help of an equity loan of up to 20 per cent.
FMB director of external affairs Brian Berry said: “The scale of the housing problem is now so enormous that we need to increase the supply of new homes by at least 500,000, the equivalent size of Birmingham, by 2015, if we are to meet rising demand.
“If the government was seriously committed to increasing the supply it would reintroduce housing targets for communities that failed in their obligation to meet local demand.”
Mr Berry welcomed the proposed mortgage indemnity insurance scheme as a welcome step but criticised the government’s 2016 zero carbon targets and the Community Infrastructure Levy.
Prime Minister David Cameron and Deputy PM Nick Clegg visited Linden Homes’ Boxgrove Gardens development in Guildford today where they announced details of the housing strategy.
Linden Homes managing director Ian Baker said: “This is a significant step forward in making responsible, affordable lending available to home buyers across the country to help them purchase the home they’ve always wanted.
“Increasing housing supply through the government’s support to 95 per cent mortgage lending and public sector land releases will increase the industry’s ability to tackle our chronic housing crisis and contribute to creating a significant number of new jobs - providing huge social and economic benefits across the country.”
The Get Britain Building fund was welcomed as an important part of today’s announcement that could lead to short-term growth in the housing market.
Grainger plc executive property director Nick Jopling said: “Today’s surprise £400m announcement to boost housing supply is a welcome shot in the arm for the housing sector and the UK economy as a whole.
“While it isn’t the full answer to the UK’s housing crisis, alongside the other measures expected in the national housing strategy, it will go some way to easing the chronic shortage of housing facing this country.”
However there was criticism about the level of detail on financing the various schemes, with Construction Products Association economic director Dr Noble Francis tweeting “Astonishing repetition of what is in the executive summary over & over again with no detail on where funding is from”.
Speaking about the mortgage indemnity guarantee scheme, Home Builders Federation executive chairman Stewart Baseley said: “This is a great deal for people wanting to buy a new home, whether [they are] first-time buyers or existing home owners who are unable to trade up.
“It will also be a huge boost to house building. Since 2007, the biggest constraint on homes being built has been mortgage availability. This scheme will see more desperately needed homes being built, create jobs and give the economy the boost it needs.”
Barratt Developments chief executive Mark Clare said: “Lack of mortgage finance is the single biggest issue homebuyers face – today’s announcement gives creditworthy customers the chance to buy their own home with a 5 per cent deposit.”
“We have therefore taken immediate action so customers can pre-register their interest on our website. This is exactly what the industry needs to ensure that customers can buy and we can build the homes the nation so desperately needs.”
Further measures to support housebuilding and construction already being pursued by government include the Community Infrastructure Levy where developments are levied and ringfenced to be put back into local projects.
Among the key points of today’s housing strategy, Laying the Foundations: A Housing Strategy for England, was:
Supporting a new and innovative new build indemnity scheme led by the Home Builders Federation and Council of Mortgage Lenders to provide up to 95 per cent loan to value mortgages for new build properties in England, backed by a housebuilder indemnity fund
Consulting on a proposal to allow reconsideration of those planning obligations agreed prior to April 2010 where development is stalled
Launching a new £400 million ‘Get Britain Building’ investment fund, which will support building firms in need of development finance, including small and medium-sized builders.
Supporting and encouraging more individuals to build their own homes through a Custom Homes programme, including making available up to £30 million of new funding to support provision of short-term project finance on a repayable basis.
Providing £100 million of funding to bring empty homes back into use as affordable housing and are announcing £50 million of further funding to tackle some of the worst concentrations of empty homes.
Consulting on changes to council tax to help tackle empty homes and bring them back into productive use.