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Shapps denies mixed messages on mortgage finance

Housing minister Grant Shapps has played down claims he is sending mixed messages on the housing market by calling for stagnant house prices at the same time as pushing banks to lend more to first time-buyers.

In a property market debate in the House of Commons yesterday, shadow housing minister Alison Seabeck suggested Mr Shapps was in danger of contradicting himself and called on him to clarify the outcome of his meeting with FSA chief executive Hector Sants, the man in charge of the ongoing mortgage market review.

She said:  “Did he ask him to tighten regulation, so that the market stagnates and prices remain low? Or did he argue that regulations should be loosened to encourage more people into the market to stimulate it? Which was it?A stable housing market is a noble aspiration, but it requires concerted action across the sector to deliver the homes we need.”

Mr Shapps acknowledged mortgage finance had been too restrictive and said he wanted to ensure the supply of credit from the banks was available.

He said:  “The hon. Lady referred to my conversations with the FSA. I can tell her that I say exactly the same thing to the FSA that I say to this House and to the public, which is that there needs to be an adequate supply of lending, particularly to first-time buyers who are the motor that drives this whole issue and who are particularly relevant to housing supply. House builders are unable to build their product and sell it to anyone if there is no competition in the market place. Mortgage availability, therefore, is a very big issue.”

Mr Shapps has previously said that house prices are too high and that people should no longer view property as an investment for retirement.

He said:  “I think it is horrendous that a first-time buyer would need to be 36 on average if they do not have the support of mum and dad.

“The main thing everyone requires for their subsistence is a roof over their head and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.

“I think the answer is house-price stability.”

Yesterday’s debate also focused on the government’s incentive scheme to match council tax receipts for each new home built, the New Homes Bonus.

Mr Shapps confirmed the scheme will be funded with nearly £1bn of government funds.

He added:  “Where an affordable home is being built, an additional £350 is proposed in the consultation document, which is currently in front of me and which I am considering. The new homes bonus is therefore potentially an incredibly powerful incentive to get out there and build homes.”

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