Buy to Let Landlords Snubbed Under New Housing Deal

Buy to Let Landlords Snubbed Under New Housing Deal

16:48 PM, 21st November 2011, About 13 years ago

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The Government has launched a make-or-break housing strategy designed to boost the economy, create jobs and help people buy homes – but seems to have forgotten buy to let landlords.

The initiative has the backing of Prime Minister David Cameron and Deputy Prime Minister Nick Clegg and lays out a blueprint for the future of housing in Britain.

Behind the scheme is a shift in thinking that aims to pump public money into house building to give first time buyers the chance to move in to affordable homes.

Buy to let landlords may think the move will contract the buoyant rental market as demand will shrink as would-be first time buyers who cannot purchase a home will switch to the government-aided schemes.

The likelihood is that if the government scheme does build momentum in the market, but little change will be seen for years as new housing schemes crawl through planning and building phases.

Details of the scheme need fleshing out, but the main proposals are:

  • Deposit help for first time buyers – a new build mortgage indemnity scheme that will give 100,000 home seekers a leg help by underwriting deposits. The idea is buyers will only need 5% cash to buy a new home, with the taxpayer bridging the gap between the reduced deposit and mortgage.

    If the home is sold at a loss, the government will pay compensation.

  • Bigger right to buy discounts – The discount will increase to up to half the value of a home and as homes are bought, another social housing home will be built.
  • Cash for house builders – A £1.8 billion cash fund to help construct 170,000 affordable homes over the next four years.
  • Aid for housing projects – A mixed bag of measures like freeing up public land, funding for aborted projects and money for self-builders.

Speaking at the Confederation of British Industry annual conference, Cameron said: “The shortage of credit and lack of confidence affects some parts of the economy more than others. One of the markets that is particularly blocked is the housing market.

“The consequence of the credit crunch is that the lenders won’t lend, the builders won’t build and the buyers won’t buy. No one wants another borrowing boom but when first time buyers on a good salary can’t get a reasonable mortgage, the market grinds to a halt. That ricochets round the economy hitting builders, retailers and plumbers alike.

“I have launched a radical new strategy to support new mortgages for up to 100,000 people who would otherwise be locked out of home ownership. We’re also selling council houses house again and using the money to build more houses. We’re rewriting planning rules so the construction industry can grow.”

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