Developers to get cash to build more affordable homes

Developers will be given more cash in advance to help them keep building homes during the credit crunch, the government has announced.

The rescue package from the government aims to give developers faster and easier access to the Housing Corporation's £8.4bn affordable housing programme by removing deadlines and increasing funding flexibility.

It includes the set-up of a national clearing house where housebuilders can approach the Housing Corporation to sell unsold stock for affordable housing.

The body will also have the power to offer more money to developers of social housing at the start of a project to improve their cash flow and encourage more new starts.

Developers bidding for the body’s affordable housing programme will also be able to approach the body at any time, rather than waiting for the quarterly bidding round.

The package of immediate strategies aim to restore confidence to the building sector and help the government get closer to its target to build 180,000 affordable homes over three years.

Housing minister Caroline Flint said the government had also allocated £270m of funding to the Housing Corporation to deliver 3,800 homes for social rent and 1,500 shared ownership homes over the next three years.

She said without the rescue package, prospective home buyers risked being priced out of the market in another property boom after the credit crunch.

She said: “There is an overwhelming case for building more housing and we must remain as ambitious as possible.

“But we also have to be flexible and responsive enough to adapt to the current economic climate. We have to acknowledge not only the difficulties faced by individuals and families, but by housebuilders too.”