11
Nov
The government and businesses must adopt a two-pronged approach to
deliver both short and long-term solutions to the housing crisis,
claims a report from the CBI.
The government and businesses must adopt a two-pronged approach
to deliver both short and long-term solutions to the housing
crisis, claims a report from the CBI.
The CBI released a report today (11 November), Unfreezing the
housing market, where it called on the government to get the
housing market moving in the short-term, and help tackle structural
failures to ensure long-term stability.
The short-term solutions included introducing a mortgage
indemnity guarantee (MIG) insurance scheme to enable first-time
buyers to take out low-deposit mortgages, and allow them to access
savings locked up in their personal pension pots to boost their
deposits. It is also asking for support to existing homeowners
wanting to move house with special mortgage products designed for
homeowners in negative equity.
John Cridland, director-general of CBI, said: “We have to
do more to give our young people hope in the future and suport
their aspirations to be home-owners. It is important we get credit
flowing to those who need it most. We could reduce the risk of
higher loan-to-value mortgages if the government encourage lenders
to take out insurance against the borrower failing to meet
payments.”
Recommendations for the longer-term include reducing the
regulatory drag on house builders, ensuring that the planning
system is pro-growth to make the building of more new houses
possible, ensuring that financial regulatory reform does not
restrict the avialibility of mortgages and reveiwing Stamp Duty,
with a view to making it more progressive.
Cridland said: “It’s also crucial that the
government presses ahead with relaxing some planning rules for
‘change for use’, particularly from commercial to
residential. Owning a home has been a natural aspiration for
generations of Britons since the 1950s, and should not become the
preserve of a lucky few. Without a steady stream of first and
second-time buyers, the housing market freezes and the whole
economy suffers.”
These solutions were first mooted by Cridland in his speech at
the CBI North-East Annual Dinner at the end of September. The
speech received a mixed reaction from the property industry.
However, the CBI insists that housing is a vital part of the
UK’s economy, and the stagnation seen in house sales has made
the economic downturn worse. It accounted for around a third of the
6% drop in GDP during the recession, while the number of first-time
buyers fell from a peak of 167,400 in 2001 to 36,200 in 2011.
Cridland believes the short and long-term recommendations will
bolster a well-functioning and sustainable housing market as a key
feature of the UK’s long-term economic growth