Residential  

Chancellor shuns £50bn housebuilding plan

Chancellor shuns £50bn housebuilding plan

Philip Hammond has rejected calls from communities secretary Sajid Javid to borrow £50bn pounds to deal with the nation's chronic housing shortage by ramping up housebuilding 

Speaking on BBC One’s Andrew Marr programme on Sunday (22 October), Mr Javid suggested the government should “take advantage of some of the record-low interest rates that we have” and borrow money to invest in housing and other infrastructure projects.

It was later reported that Mr Javid was hoping for £50bn-worth of funding from the Treasury at next month’s budget on 22 November to get the programme underway.

But when asked about the proposals by Liberal Democrat leader Sir Vince Cable yesterday (24 October), the chancellor said they were not government policy.

Mr Hammond is reportedly considering smaller-scale interventions in the housing market, such as a cut in stamp duty for first-time buyers, to help people get on the housing ladder.

An extra £10bn has also been pumped into the government’s flagship Help to Buy: Equity Loan programme in an attempt to address the housing crisis.

But with a resurgent Labour Party capturing the youth vote by pledging to boost the construction of affordable homes, the government has come under increased pressure to focus on methods of increasing supply.

Earlier this year, the English Housing Survey revealed home ownership in England had fallen to its lowest level for 30 years, with almost half of young adults now renting privately.

Mr Javid’s proposals to borrow more to fund housebuilding were seen as a departure from the government’s austerity programme, which is aimed at eliminating the budget deficit.

His comments came as he launched an eight-week review aimed at streamlining the homebuying process, which will look at ways to tackle gazumping - making a higher offer for a house than someone whose offer has already been accepted by the seller to acquire the property - and improve digital innovation in the sector.

A raft of other measures recently announced include greater rights for tenants as part of tighter regulation of the private rented sector and a crackdown on rogue agents charging rip-off fees for property management.

Buying agent and market commentator Henry Pryor commented: “I thought that the large thud that we heard over the weekend was the penny finally dropping within the cabinet, and I can only hope that the chancellor’s wording – that it is not currently government policy – might mean that on the 22 November it will be government policy.

“If he is ruling it out, then he is not the chancellor I thought he was. He has a property development background and should ‘get it’ more than most. If this turns out to be a hare that was set running by the communities secretary, there will be some people who are deeply frustrated and a few who will be even more cross.”

simon.allin@ft.com