23
Nov
First-time buyers could get government-backed 95% mortgages.
David Cameron and Nick Clegg have announced the introduction of
taxpayer-backed 95% mortgages as part of a package of measures to
help "unstick" the housing market and make the "dream of home
ownership" a reality for more people.
The government's housing strategy, published on Monday, is
designed to tackle the housing shortage, boost the economy, create
jobs and give people the opportunity to get on the housing
ladder.
On a visit to Boxgrove Gardens in Guildford, Surrey, Cameron and
Clegg outlined plans to break the cycle in which "lenders won't
lend, builders can't build and buyers can't buy".
"The housing market has got stuck," said Cameron. "We are
determined as a coalition government to unstick that market, to get
the market moving."
Among the plans is a scheme that will give a helping hand to
100,000 prospective buyers currently frozen out of the housing
market because of the need for large deposits.
Banks are currently demanding deposits of up to 20% of the value
of a property from first-time buyers. Under the proposals,
homebuyers will be able to secure loans on a newly built home with
a 5% deposit.
If the housing market suffered a severe downturn, the taxpayer
could ultimately be responsible for a part of the loss under the
scheme. But homebuyers would first lose their deposits and the loss
to the taxpayer would be shared with the bank.
Other strands in the 78-page strategy include a £400m
initiative to build up to 16,000 new homes by allowing an
acceleration of investment in "ready-to-go" construction sites
where work has stalled.
This involves new money and could see building work start next
July. It is hoped that up to 3,200 of the proposed new properties
will be affordable homes and the initiative will support up to
32,000 jobs.
Cameron said he wanted to make "the dream of home ownership" a
reality for more people rather than move Britain towards a European
model of renting more homes.
"I still think for most people they have a dream of owning their
own flat or their own home and I don't see why we should give up
that dream."
He said the government had enough funds to back the new housing
strategy. "What the government is doing is using the strength of
its balance sheet, as it were, to back the banks and to back people
that want to get mortgages. The alternative is to sit back and see
a stalled housing market."
Cameron said that, in some towns, a police officer married to a
nurse would simply not be able to get on the housing ladder. "It's
not just about the economy, it's also about people's hopes and
dreams," he said.
"You always remember that moment, if you've done it, when you
get that key and you walk into your first flat, it's a magic
moment.
"It's a moment I want everyone in this country to have, not just
better-off people. The dream of home ownership is something that
should be achievable for everyone."
He added: "Those that do the right thing and work hard, we want
to do right by."
Ed Balls, the shadow chancellor, said the £400m for stalled
housing projects was "small beer" but a move in the right
direction.
He told the BBC Radio 4 Today programme ahead of the
announcement: "I think it is a good start it at last shows
recognition from the government that we need action now to get the
economy moving and to start building houses, get people into
jobs.
"I am afraid it is rather small beer in its scale; it is a
£400m boost, but George Osborne last year announced a
£4bn cut in housing spending, and we have proposed building
25,000 homes this year and next using the bank bonus tax, which
would be a considerably bigger boost to jobs in the construction
sector.
"But at least it starts to show that David Cameron and George
Osborne have realised that unless you act to get growth and jobs in
our economy you can't get the deficit down and so I think it
probably does show that at last the government is starting to
shift."
Shelter, the housing and homelessness charity, said the measures
to deliver more housing fell "far short" of the quarter of a
million new homes needed each year to meet demand.
Shelter's chief executive, Campbell, Robb said: "We are
concerned that schemes to help first-time buyers and council
tenants will simply encourage people to overextend themselves,
while doing nothing to address the sky-high cost of housing.
"This strategy also does almost nothing to help the growing
number of families living in insecure private rented housing with
hardly any protection from rogue landlords or unexpected rises in
rent. Unfortunately these aren't the bold and radical solutions we
need to solve a housing crisis that's been decades in the
making."
Other strands of a strategy include:
• An extra £50m on top of the £100m from this
year's budget towards an initiative to refurbish empty homes,
mainly in deprived areas. Tackling the 700,000 empty homes across
the country is described as a "top priority" in the strategy, and a
key feature in the drive to increase the provision of affordable
housing.
• Plans to consult on increasing discounts under right to
buy – the scheme which allows social housing tenants to buy
their properties. The discount will be up to half the value of the
property, with receipts from the sales used to support the funding
of new affordable homes for rent on a "one-to-one basis". The plan,
first unveiled by Cameron last month, is expected to deliver
100,000 new homes and "support" 200,000 jobs.
• A consultation on "pay to stay" proposals in light of
those on high salaries benefiting from taxpayer-subsidised homes.
The consultation will suggest those social tenants on household
incomes of more than £100,000 a year should pay up to market
rents if they want to continue living in taxpayer-subsidised
homes.
Councils will be given new powers to reject applications for
social housing from people who own a perfectly acceptable home of
their own.
Clegg said he recognised the need for reforming the planning
system to avoid building delays.
"We do need to make the planning system a bit more efficient so
that we can get going with these things, so that we don't get these
terrible delays," he said.
In a foreword to the government's new housing strategy, Cameron
and Clegg say: "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.
These plans are ambitious – but we are determined to deliver
on them."