Lenders call for Budget pledge

The call came from the Council of Mortgage Lenders and the Home Builders Federation as the sector set out its demands ahead of chancellor Alistair Darling’s Budget next week.

The organisations said the government must clarify how it plans to manage the funding gap left by the expiry of its special liquidity and credit guarantee schemes.

Meanwhile, the National Housing Federation asked the government to invest £11.7 billion between 2011 and 2014 if it wants to meet its target of 50,000 new affordable homes each year.

The SLS was set up in 2008 in response to the financial crisis. It allows banks and building societies to swap mortgage-backed bonds and other un-wanted toxic assets for Treasury bills to inject liquidity into financial markets and encourage banks to do business with each other. The CGS was similarly put in place to make sure the banking system had funds necessary to maintain lending throughout the crisis.

Both schemes have so far provided support totalling £312 billion - equivalent to 25 per cent of the UK’s stock of residential mortgage lending.

The CML, in its submission, warned that lenders will find it difficult to refinance from private sector sources, the support provided under the SLS, when the scheme expires between April 2011 and January 2012 as part of government attempts to reduce the deficit. The body has similar concerns over the CGS, which expires over 2012-2014.

The HBF said the government needed to assist the return of higher loan-to-value mortgages at more affordable rates and charges, to facilitate a sustained increase in building.

A spokesperson for the HBF said: ‘Most development sites are mixed tenure and if people are struggling to get mortgages for private homes then we won’t have the affordable housing that comes with these developments. Boosting mortgage availability is key to unlocking more social housing.’

The CML’s submission said the shortage of funding will make it harder for the private sector to fund joint initiatives with the housing industry to increase low cost homeownership schemes. The report added: ‘The cost of funding of social housing providers is likely to rise, impacting on their capacity to increase housing provision to match demand.’

In its submission, the NHF stated that the government ‘has already committed to maintaining expenditure on health and education services’. It add-ed that it ‘holds the strong view that commitment should also be extended to ensure investment in housing delivering continues’. ‘Housing market re-newal and Supporting People funding should also be prioritised,’ it stated.

The Environmental Industries Commission, which represents the UK’s en-vironmental technology and services industry, said the government should stimulate green growth by allowing developers and councils to finance environmental improvements by borrowing against future tax revenues.

It launched a report calling for the government to introduce a new environmental tax increment financing model, to finance green infrastructure including energy efficiency retrofitting of low-income family homes and building low carbon social and affordable homes on brownfield land.

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