Housing: David Cameron vows to 'get Britain building'

Buyers of new homes will be able to borrow up to 95% of their value as part of plans the government says will help get "Britain building again".

The mortgage indemnity scheme, in which the government will underwrite part of the risk to lenders, could help up to 100,000 people in England.

It is part of a wider strategy to build more homes and boost home ownership.

Labour said it was "too little, too late" and did not compensate for earlier cuts to housing budgets.

Building more homes is one of the government's economic priorities, with the number of new ones being built at its lowest level since World War II, and with rents and prices remaining high while mortgage lending is restricted.

Just 121,200 new homes were made available in 2010-11, half of what ministers say are needed.

At the heart of the coalition's approach is an indemnity scheme which will enable lenders to provide mortgages of up to 95% of the value of newly built homes to would-be buyers - most of whom are expected to be first-time purchasers - supported by government guarantees.

Addressing the CBI's annual conference in London, Mr Cameron said it was not his aim to create "another borrowing boom" but to help the many people who could not afford huge deposits needed to buy properties.

"When first-time buyers on a good salary cannot get a reasonable mortgage, the whole market grinds to a halt," he said.

"And that ricochets around the economy, affecting builders, retailers, plumbers - all the people that depend on a housing market that is moving.

"If we don't do something like this we are not going to get this vital market moving... We will restart the housing market and get Britain building again."

Ministers will also intervene to kick-start some of 130,000 building projects which are estimated to have been approved but delayed by funding problems.

A "Get Britain Building Fund" will see developers compete for a slice of £400m to take forward "shovel-ready" projects which meet the right criteria, among them a commitment to affordable homes.

This initiative will begin in July and aims to lead to 16,000 new homes being built, providing work for 32,000 people.

It is hoped that about 450,000 mainly affordable homes will be built by 2015, many of them on publicly-owned brownfield sites, although the government is not setting any specific targets.

Other parts of the strategy include empty properties being brought back into residential use and new providers being encouraged to enter the social housing market.

To help potential buyers, tenants of social housing are to get the right to buy their home - a hallmark of the Thatcher government in the 1980s - for as little as half the market price.

The money will then be used to build more affordable housing, with ministers saying they will build a new home for every home sold off in this way.

The House Builders Federation said the lack of mortgage availability since the 2008 banking crisis had been "the biggest constraint" on new homes and the indemnity scheme would help to address this.

"In recent years, many people have been unable to realise their dreams of buying a home because of the huge deposits required by lenders," its executive chairman Stewart Baseley said.

"This scheme will be allow people to buy their new home on realistic terms and help, in particular, hard-pressed first time buyers."

'Dangers'

Labour say the government have failed to get a grip on the problem in its first year in power and the situation has got worse in some parts of the country.

"These measures are too little, too late from the man who was responsible for choking off growth in the British economy when he came to power," opposition leader Ed Miliband said.

"Putting back just 10% of the £4bn he cut from housing investment last year will convince no-one he is serious about getting growth back into the economy."

The opposition have urged ministers to levy a £2bn tax on bank bonuses to pay for 25,000 new homes and 100,000 new construction jobs for young people, as part of their five-point plan for boosting growth.

And housing charity Shelter said the government's plans to move more people from social housing into the private rented sector could increase homelessness.

"There is a real danger that as rents go up that welfare bills go up as well," its chief executive Campbell Robb said. "There needs to be much more alignment between housing and welfare."

Other measures in the strategy include a pledge to consult on 'Pay to Stay' proposals where social tenants on high salaries will pay up to market rents if they want to continue living in taxpayer-subsidised homes.

Ministers also say there will be tougher action to tackle "the outrage" of 50,000 unlawfully occupied social homes.