Summary of the Government's new Housing Strategy Initiatives

On 21^st November 2011 the Coalition government published its new housing strategy:- Laying the Foundations: a housing strategy for England

The strategy claims to:-

1. Tackle the current housing shortage
2. Boost the economy
3. Create jobs
4. Give people the opportunity to get onto the housing ladder

According to the government, this new strategy will "break the current cycle in which lenders won't lend, builders can't build and buyers can't buy. We'll be making it easier for people to secure mortgages on new homes, help people get on the property ladder, address unfairness in social housing and ensure homes that have been left empty for years are lived in once again."

These are huge claims by the government, especially considering they have already cut the house build budget by £4 billion!

So what new initiatives does the new strategy offer that will meet their claims?

Initiative No 1: Help for Homeowners, New Build Indemnity Scheme

The first initiative is for homeowners to secure loans on newly built homes with only a five percent deposit. This is being referred to as a ‘new build indemnity' scheme. According to the strategy:-

"The Government and housebuilders will help provide security for the loan, so if the house is then sold for less than the outstanding mortgage total, the lender will be able to recover its loss."

This in turn is believed to:-

1. Encourage lenders to offer more mortgages with smaller deposits
2. Increase the demand for new homes 

This is expected to help 100,000 prospective buyers currently ‘frozen out' of the housing market.

Also read my next article - Will the New Build Indemnity Scheme Work?


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