Affordable housing plan unveiled

20 November 2011 Last updated at 22:46 ET

Ministers say there is a fundamental "lack of confidence" in the market

Plans to deal with an acute shortage of affordable homes by boosting the house-building sector are set to be revealed by Prime Minister David Cameron later.

Proposals include a £400m fund which will help to kick-start schemes which are ready but lack necessary finance.

The initiative, for England only, will begin in July and aims to build 16,000 new homes and create up to 32,000 jobs.

The government call the plans "radical" but Labour say ministers have failed to deliver on housing.

'Shovel-ready projects'

Building more homes is one of the government's economic priorities.

The number of new homes being built is at the lowest level since WWII, rents and prices remain high and mortgage lending is restricted with the average age of a first-time buyer now thought to be close to 43, says the BBC's home editor Mark Easton.

Just 121,200 new homes were made available in 2010-11, 6% fewer than the previous year.

Although the decline was not as sharp as in the previous year when the number of new builds and conversions fell by 23%, Labour say the government has 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.

In an attempt to stop this decline, ministers are to intervene to support "shovel-ready" building projects that have been delayed by funding problems.

A "Get Britain Building Fund" will see developers compete for funding to take forward projects which meet the right criteria, among them a commitment to affordable homes.

It is hoped that about 450,000 mainly affordable homes will be built by 2015, many of them on publicly-owned brownfield sites.

Empty properties will be brought back into residential use and new providers will be encouraged to enter the social housing market, say ministers.

To help potential buyers, tenants of social housing are likely 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, and a mortgage indemnity scheme may mean first-time buyers can borrow up to 95% of the value of a home.

'Endless For Sale signs'

In the foreword to the government's new strategy, David Cameron and his deputy Nick Clegg say the UK is facing a situation where "lenders won't lend, so builders can't build and buyers can't buy".

"That lack of confidence is visible in derelict building sites and endless For Sale signs," they write, adding that this is doing huge damage to the economy and society.

Ministers will argue their overall strategy marks a "step change" in their approach, but the BBC's local government correspondent Mike Sergeant said there would be questions about whether this was simply bringing together announcements already made, or was more substantial.

Prime Minister David Cameron is expected to reveal the plans in a speech to the CBI's annual conference, ahead of a statement to Parliament.

Ahead of the announcement, CBI director general John Cridland said the UK needed "a bold package to get the housing market going again".

Amid reports that ministers are looking at ways to underwrite mortgage finance, he said would-be buyers who could not rely on their parents for help with deposits needed assistance to "bridge the gap" between what banks were willing to lend them and the market value of properties.

Labour have said the new strategy - coming 18 months after the coalition came to power - is belated and does not go nearly far enough.

They have urged ministers to levy a £2m 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.