Government bumps up £200m rescue package to buy unsold homes

Builders struggling to sell homes during the credit crunch will be able to offload them as affordable housing under new government plans.

Housing minister Caroline Flint has confirmed extra money, on top of £200m already announced, will be earmarked to buy new homes languishing in developers’ portfolios.

Only weeks ago she announced a range of measures to combat the housing downturn, including increases to upfront payments made to social housing builders.

In a move to stimulate the market further, she said more money would be made available to buy unsold stock “should the properties be in the right place, at the right price and offering good standards".

“The government believes this is the right approach rather than setting an arbitrary cap on the figure, to avoid the purchase of inappropriate properties,” the Facing the Housing Challenge announcement stated.

The government also nominated New Growth Points in areas including Northumberland and Cornwall where councils must increase the number of homes by 20%, bringing an extra 75,000 homes online.

Home Builders Federation (HBF) executive chairman Stewart Baseley said the measures did not go far enough.

“Whilst welcoming any steps aimed at stimulating the housing market, today’s announcements are clearly not enough,” he said.

“We have been warning government for months now of the implications for the wider economy of not taking steps to address the situation in the housing market.

“The consequences of a lack of wide scale action are now becoming clear.”

In a report to Treasury, the HBF warned housing starts would fall beyond 2009, if action was not taken and that the industry could take “several years” to recover.