Rescue bid for ailing housing market

In a move to shore up the UK’s declining housing market, the government has announced a package of measures that include a ‘rent first, buy later’ scheme and plans to develop surplus land for new housing.

[ClickPress, Thu Jul 17 2008] In a move to shore up the UK’s declining housing market, the government has announced a package of measures that include a ‘rent first, buy later’ scheme and plans to develop surplus land for new housing.

The rescue bid comes at a time when the property market has been seriously hit by the credit crunch, which has seen tightened lending conditions by banks, a record low in mortgage approvals, and the withdrawal from the market of the 100% mortgage, all of which has made it increasingly difficult for first-time buyers to get on the housing ladder.

With the ‘rent now, buy later’ scheme, households with an income of less that £60,000 will be allowed to rent property at a discounted rate for two to three years with the option of buying the property later. The discount, at 80% or less, is intended to help people save for a purchase deposit.

The rescue package also recognizes the need to help the building industry if the government is to increase housing supply and achieve its target of building 3 million new homes by 2020. To this end, ‘local housing companies’ are to be created, involving local councils and the private sector working together to build homes on land categorized as surplus. The four councils taking part in a pilot run – Barking and Dagenham, Newcastle, Nottingham and Manchester – are to share a £510m fund.

The housing minister, Caroline Flint, also announced plans to build up to 75,000 homes in some 20 towns and cities deemed most in need. Additional financing to that already pledged will be made available to buy up surplus housing stock and turn it into affordable homes.

Commenting on this plan, Adam Sampson, chief executive of Shelter, said that the government needs to make sure the houses it buys are in the right location. "Buying up surplus housing stock offers a quick-fix way to generate more affordable and social rented homes,” he said. “But they must be the right homes in the right places if they are to make a difference to hard-working families.”




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