Britain's social housing industry suggests £1bn spree on empty stock

Published 19th Jun 2008

The group representing Britain's social housing industry is in talks with the Government to free £1 billion of public money to help to bail out the new homes market.

The funds would be used to buy tens of thousands of mostly inner-city flats and family homes at a heavy discount from beleaguered housebuilders.

These properties were originally expected to be sold to private buyers but are now part-built or empty as the sector struggles to deal with the sharpest slump in sales for more than a generation.

If the package is agreed, it could kickstart the moribund housing market by buying at least 10,000 units. That would help the big housebuilders, whose share prices have collapsed over recent weeks amid fears that they will be unable to service their debts as cashflow dries up.
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The £1 billion of funding has already been agreed as part of an £8.4billion three-year budget of taxpayers' money set by the Government and ready for gradual allocation to the Housing Corporation, its social housing quango.

Each year about half the country's new social housing stock is built to order by housebuilders as part of their private housing sales sites. Planning approval is granted to builders on sites only if they allocate on average 30 per cent of their stock for affordable and social housing, which is then sold off-plan to housing associations.

However, most of the big housebuilders, including Barratt Developments, Taylor Wimpey and Persimmon, have stopped building on any new sales site over the past few months. The mortgage drought has caused reservations on new homes to fall by between 30 per cent and 50 per cent compared with a year ago.

Housing starts in total this year are on course to fall to between 100,000 and 110,000 new units, down from about 164,000 housing starts in 2007 and the lowest level since 1945.

James Rossiter and Siobhan Kennedy

Source: ' TheTimes '

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