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Taxpayers’ money to buy unsold new homes in £1billion rescue plan
Joe Murphy, Political Editor21.04.09
A £1 billion emergency rescue for the housing market will be in tomorrow's Budget.
Alistair Darling will intervene with taxpayers' money to prevent the collapse of stalled housing developments and could buy up unsold new properties to let to needy families.
At the same time, the Chancellor is expected to extend to the end of this year the suspension of stamp duty on properties costing £175,000 or less — a move brought in last September in an attempt to perk up the housing market, which has proved to be not enough.
The package of measures will be hailed as an attempt by the state to protect construction industry jobs and stave off a market collapse that could damage Labour's hopes of hitting its long-term targets for house building.
The plan was confirmed by Treasury sources as Housing Minister Margaret Beckett announced the launch of her long-awaited plans to help homeowners who fall behind with their mortgages.
The scheme is not the generous bail-out that some reports suggested late last year but will typically allow mortgage payers to postpone payments for up to two years if they become temporarily unemployed or ill.
The idea is to save them from repossession, but ultimately homeowners will have to pay all the mortgage money they owe, even if that means selling their houses.
The Government is offering insurance to lenders, who choose to take it up, that taxpayers will meet their losses in the handful of cases where homeowners cannot repay loans. Labour was dealt a blow today by an opinion poll showing voters have more confidence in the Tories to run the economy. Only 35 per cent back the Government, against 45 per cent for the opposition, a gap that has widened over the past year.
On voting preference, the Conservatives led by 40 to 30 per cent in the ICM/Guardian poll, a narrower gap than in other surveys.
The poll found few shared the Chancellor's optimism about the chances of recovery this year, with more than half expecting things to get worse and only four in 10 anticipating an improvement.
Preventing a bigger slump in house building and the homes market is seen by ministers as vital to avert a worsening political crisis.
Richard Diment, director-general of the Federation of Master Builders, said the industry needed help. “We're sinking deeper and deeper into a massive housing crisis, and we cannot afford to use the state of the economy as an excuse for doing nothing about it,” he said.
The industry says it needs to complete 223,000 new homes per year to keep up with demand but was only finishing 185,000 a year before the crash. This year's figure is set to be 70,000.
Mr Darling's rescue schemes will even involve the Government completing road and infrastructure schemes that developers had promised to throw in for free in new estates.
A government source said: “We need to unlock these developments but just as importantly we need to ensure there is a construction industry left when the recovery gets under way.”
Reader views (25)
Paul from London:
Not wanting the government to bail out private developers with taxpayers money is NOT the same thing as not wanting any social housing at all.
Local councils and government should be building their OWN purposely designed housing stock, not buying sub-standard, over-priced tat from private developers who otherwise can't sell it - and yet will end up charging the taxpayer a premium to take it off their hands, (by basing it on previous market valuations which no longer apply).
The housing market in general, and social housing in particular, needs long-term planning and vision - not the knee-jerk, panicked reaction that this government seems to apply to everything.
- John T, London
I've never wanted to buy a massively overpriced and badly built 'new home' - total waste of money, never mind the dodgy surveyors giving dodgy values. Now it seems as a tax-payer we're all being forced to buy this rubbish. Let the developers go bust, it's just what happens naturally in a recession. In a few years time we'd have been over it. Think I'll emigrate asap!!
- Andy, London
THE UK IS MORALLY AND FINANCIALLY BANKRUPT. FACT.
DARLING HAS NOT GOT TWO BENT PENNIES TO RUB TOGETHER.
All I read now is that Darling Darling is going to "find" another billion here, another 50 billion somewhere else and YET MORE CASH FOR MP's EXPENSES @ GBP170.00 per day for "attending" the House of Conmen.
No point listening to the Budget speech tomorrow - it will have been written by those same wombles whom loiter in Downing Street with intent to try and con Joe Public.
The UK puts banana republics in the shade.
If there was anything good to say about the housing situation in the UK I would say it.
There is nothing good about Darling, or Brown, or MISS PIGGY SMITH, or Jackboot Straw, or Harman or Keen or Mandelson - complete and utter wasters the lot of them.
Bring on the General Election - before Joe Public really loses their rag.
- Reuben Camara, Morecambe UK
"The package of measures will be hailed as an attempt by the state to protect construction industry jobs".....well that guarantee's work for our east-european friends and ensures that developers and those associated with inflating the property market keep their pockets lined. So if the government do decide to purchase these properties are they going to pay the existing high prices? Property prices need to fall to a level that affordable by all, and if they do decide to nvest in kick-starting the building trade ALL work should go to local builders. I still don't agree with what they have in mind as the money would be better spent sorting out the failing health service, improve our education system, support our pensioners better and sort out crime...not too much to ask is it?
- Alan, London
Please can we have a General Election to remove these idiots from power?
- Paul, Chatham, UK
Brilliant idea we can put all the asylum seekers in them when the French decide they have had enough.
- Rob, Rock Ferry, Uk
All property should be owned by the State; that way it can never be exploited.
Homes for all; is a basic human right in any modern society; even if we are just above Albania; it matters not.
Private Property ownership; is theft from all the people.
No I am not a communist; more a realist; but that is my honest opinion; yours may differ.
- Mickyinlondon, london
I don't really see what anyone has to moan about with this idea? There are over 5 million people on council house waiting lists. The reason for that is because most people do not earn enough money to rent within the private sector and because Thatcher and the Tories thought it was a great idea for people to buy their council homes. Now there is no stock left for people to live in.
Personally, i live in London and i have a partner and child but because the rent is so high in London (aprox £1000 p/m for a 1 bed flat), we cannot afford to live together. In order for me to afford somewhere i can live with my family i will need to commute quite a distance into London. If people have a problem with the government supplying affordable housing then i can only assume they also have a problem with poorer people having any children.
- Paul, London
Give a politician a tool and he will use it to maintain power. I wouldn't bet a brass farthing that these funds won't be predominantly spent propping up a collapsing housing market in marginal Labour seats.
- Dave, Uxbridge, UK
THis government never stops meddling in market forces. And don't forget they will decide who the "needy" are.
- Fred, London
This is Labour's stupid way of trying to get house prices rising again in time for the election. If thousands of homes aren't selling, that's because thousands of homes are overpriced! The government should stop wasting huge amounts of taxpayers money buying up unsold homes and turning them into the grotty council estates of the future and simply let the price of property fall to an affordable level! Are Labour completely incapable of doing anything right?
- Matthew, London UK
This has to rank as one of their stupidest ideas to waste our money yet.
It's a tough competition with a lot of front runners I know, but I think this must be somewhere in the ten front runners...
As for Mary from Henley and Bob from Cheam, please, those ideas are FAR too sensible and simple for this government to use!
If it's not overly complicated, convoluted and in need of a small army of official bureaucrats to enforce, then it's not an idea this government wants to hear. They want more state control, not simplification...
- John, London
So once these properties are purchased and let by the State to the needy, no doubt at low rental, the taxpayer will no doubt be responsible for maintenance and up-keep, or will Darling be a marketeer landlord and go for profit? The Government has incurred quite enough debt without indulgning in wheezes like this.
- James Elliott, Eastbourne UK
Any property should be bought strictly in an independent evaluation of the land used and the construction costs . There should be no profit whatsoever for all involved. It has been the greed of those involved in the housing market who caused a good part of the crisis, especially estate agents and lawyers. sadly I foresee another inflationary gravey train. Maybe those greedy politicians want their properties to get to the previous inflated values .
- Terry, Hennebont France
I think there's some merit to this idea. It's a shame that the US Government didn't use this approach to keep delinquent mortgagees in their homes in the sub prime mortgage sector.Paying off these mortgages and taking these homes into social housing would have been a lot cheaper than refinancing the whole banking system , although for most Americans this is probably too close to communism.
- Andy, London
Our housing market has achieved growth for the 3rd month running, probably because they have left it pretty much alone so far. PLEASE don't interfere, it'll do better without your help!
- Barry, woking, GB
Where exactly does the government think all this money's going to come from? Even they can't print it this fast!
- Marianne, SW France
I can foresee two problems with this. One is that we will be building the slums and ghettos of the future. The second is that Labour don't understand the concept of democracy so bad architecture will be forced though regardless of the wishes of local people.
- Alan In Bow, London
Right so after bailing out the greedy banks for billions, the government are now going to bail out the greedy property developers to the tune of a billion. These get-rich-quick-merchants have so badly over priced their properties that some had to set up umbrella companies, arm 'a' selling, arm 'b' handling the legal process and arm 'c' giving the mortgage, as providers would not give mortgages and independent solicitors and surveyors would warn the buyer. That was when the market was soaring. I want to hear two words from the chancellor.... AT COST.
- Ian, London
And dont forget, they will all need HIPs!
- Dave Davies, Basingstoke
Tax payers have baled out the banks, the car manufacturers and now we have to bale out house builders. Who will be next? Oh, I forgot - by far the biggest drain on our taxes are MPs obscene exenses.
- R.F., Yorks, UK
Again, Labour show their contempt for the South East, £175,000 stamp duty wouldn't even cover a 2 bedroom flat in London, whereas in Labour strongholds you could buy a 5 bedroom house without having to cough up any money in duty. If you want a fair system then make the taxation based on council tax bandings rather than bolstering your own power base.
- Bob, Cheam
So working people will be taxed to the hilt to help bail out bankers and provide brand new housing to the "needy" - which in Labour-speak is usually asylum seekers with large families who come here to live on benefits. Roll on the election.
- Ab, london
Instead of taking more and more taxes and deciding how to spend our money for us, why doesn't the Chancellor simplify and reduce taxation on letting income?
Then private landlords could decide how to spend their own money and kick-start the property market by buying entry-level housing, managing it and letting it themselves
When my parents left me some money I did exactly this to provide myself with a secure retirement income, my flats were let at very economic rates so I never had empty properties and the tenants weren't exploited
I gave up and sold the flats when cheap, unsustainable loans flooded the rental market and taxation policies made it uneconomic for me to rent at sensible rates
Then I invested the sale proceeds into safe cash investments for my retirement - can't win, can I?
- Mary, Henley on Thames, England
Great news. Another pre-election jolly wheeze to spend my money - but it will not save them.
Bring on the election.
- Dave Davies, Basingstoke
