Government guarantees to boost affordable housing
Details of plans to use government assets to boost the supply of affordable housing are expected to be unveiled this week.
The scheme is likely to take the form of state-backed guarantees to encourage private investment in affordable housing rather than government grant.
Last month it emerged the prime minister had asked officials to draw up plans to spark a house building boom to revive the UK economy.
Business secretary Vince Cable later raised the prospect of a state guarantees to support housing associations. In a speech to think tank the Centre Forum he said ‘government guarantees could trigger a significant volume of housing investment’.
The latest construction figures, published by the Office for National Statistics on Friday, showed a 22.9 per cent annual drop in public sector house building.
The government has already started to explore the potential impact offering government security can have on the housing market through its Newbuy scheme.
This encourages lenders to offer 95 per cent mortgages on new homes by offering security worth 9 per cent of the purchase price, with 5.5 per cent in the form of a government guarantee, and 3.5 per cent provided by the builder.