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Housing strategy receives mixed reaction
Alex Wellman, Inside Housing
21 November 2011

Reaction to the government's housing strategy has been mixed with some welcoming it while others have attacked it as being 'far from radical'.

The Prime Minister and Deputy Prime Minister today released 'Laying the Foundations: A Housing Strategy for England' which reveals how the coalition government intends to improve housing in the country.

Central to the strategy is a £400 million 'Get Britain Building' fund which will help deliver 16,000 homes on sites which already have planning permission – 3,200 of which will be 'affordable'.

The government is also underwriting mortgages which would allow first-time buyers to secure loans on new build homes with only a five per cent deposit.

The strategy also has proposals for tackling empty homes, charging high-earners market rents to live in social housing and greater investment in the private-rented sector.

Nick Jopling, executive property director of Grainger – the UK's largest listed residential landlord, 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.'

Paul Smee, Council of Mortgage Lenders director general, said that the strategy should lead to an increase in mortgages of up to 95 per cent. Mr Smee said: 'This scheme is good news for home-buyers, developers and indeed the UK economy. Lenders will be able to reduce the level of deposit needed by home-buyers in the new build sector, enabling more buyers to buy and so supporting the flow of new housing development, with all its positive consequences for jobs and the economy as a whole.'

Stewart Baseley, executive chairman of the Home Builders Federation said: '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.'

Interviewed on BBC's Today programme this morning, Grant Shapps, the housing minister, said the strategy was radical and ambitious and that house building needed to double to meet demands. Mr Shapps said: 'We have all these various different plans. We are not putting a figure on ‘this is how many homes are going to be built over x amount of time'.

'We will be getting this right if we are back to fulfilling the number of homes that people require and we know this is about twice as many as were built when housebuilding slumped to the lowest level since the 1920s under the old system of top down targets. What we need to do is put the measures in place to ensure that homes can be built again, it's probably twice as many. What we are doing is loosening up the market so that lenders can lend, builders can build and buyers can buy.'

However, the strategy was attacked for providing little in the way of new content and not making up for previous cuts to the housing sector.

Brian Berry, director of external affairs for the Federation of Master Builders, said: 'The strategy is far from radical. It seems to be a series of measures put together from existing ones. It does not offset cuts we have seen in housing expenditure. 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.'

Think tank Institute for Public Policy Research, also attacked the strategy saying that developers would not respond to the subsidies. Nick Pearce, IPPR director, said: 'Today's government intervention makes another lost decade of market stagnation more likely. There is a real danger that existing UK house-builders will merely use building on public land with public money to displace activity from less viable market sites – leading to no net increase in output. The house building sector in the UK needs greater competition and structural reform if it is to deliver high quality homes at lower cost.'
 
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