A multi-billion pound package to encourage more new homes to be built in the UK has been unveiled by chancellor Philip Hammond.
George Osborne’s successor has moved to speed up construction, increase the nation’s housing stock and help to make the market more attractive to first-time buyers with two key measures.
At the Conservative Party Conference in Birmingham, Mr Hammond and communities secretary Sajid Javid set out the £3 billion Home Building Fund, as well as the £2 billion Accelerated Construction scheme.
The Home Building Fund will provide £1 billion of short-term loan funding to certain builders to help build more than 25,000 homes over the next four years, and an additional £2 billion of long-term funding for infrastructure that will provide up to 200,000 new homes.
The Accelerated Construction scheme will use £2 billion to make public land with outline planning permission available to builders to help construct new properties.
The two major schemes are supplemented by a raft of other measures that will collectively help to address the high demand for residential housing in the UK, the government claims.
Other plans include state funding for remediation work that reduces any risks associated with building on brownfield sites, and a wider plan for urban regeneration to increase development on derelict or disused urban sites.
New planning policies will also favour the construction of new homes to drive up the number of houses in high-demand areas, which could result in an additional 25,000 new homes being constructed by 2021.
Investment in the future
Mr Javid said the initiatives represent the government’s intention to “build a country that works for everyone”.
He added: "We want to ensure everyone has a safe and secure place to live and that means we've got to build more homes. It is only by building more houses that we will alleviate the financial burden on those who are struggling to manage."
Mr Hammond said his party will use “all the tools at its disposal” to accelerate housebuilding and work with housebuilders to ensure that housing is affordable for everyone.
The measures will continue to supplement ongoing government initiatives such as the Help to Buy scheme, which is designed to support prospective homeowners helping to take a step onto the housing ladder.
Although the chancellor announced that the mortgage guarantee part of the Help to Buy scheme will not be extended beyond 2016, several other parts of the scheme will continue to function and support buyers, including the Help to Buy ISA and the Help to Buy equity loan scheme.
The decision was taken to end the mortgage guarantee due to the high number of lenders who are now offering 90-95 per cent mortgage outside of the scheme – which currently stands at around 30 – and which the government days can accommodate the needs of first-time buyers.
In a letter to Bank of England (BoE) governor Mark Carney, Mr Hammond said the scheme was "introduced with a specific purpose that has now been successfully achieved" and stressed that other elements of Help to Buy will continue to support prospective homeowners.
Further support is being offered by lenders providing some of the most competitive mortgage deals in history at the moment, with record low rates on fixed term two-, five- and ten-year mortgages.
The BoE also moved to stimulate the economy in the summer by lowering the base rate to a historic low of 0.25 per cent, which offered an additional boost to homeowners on tracker rate mortgages and some on standard variable rates deals, reducing their monthly payments significantly.
Further measures have been forecast for November, while the chancellor’s Autumn Statement is also expected to include new and extended initiatives to help increase the UK’s housing stock and support buyers across the country.
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