Home builders today welcomed the announcement on the Funding for Lending Scheme (FLS) that could increase house building and bring much needed social and economic benefits to the country.
A lack of affordable lending – both for individuals and businesses - has been the major constraint on housing supply in recent years. This has resulted in an acute housing supply crisis that has left people unable to buy, lengthening housing waiting lists and resulted in tens of thousands of builders losing their jobs.
The FLS could bring a number of benefits for home builders. Improved mortgage availability and lower rates should boost demand for new homes and allow beleaguered first time buyers in particular to realise their ambition of home ownership.
Any improvement in the wider housing market from increased mortgage availability will also help the industry. Home builders, especially smaller and medium sized companies, should benefit from any easing in the availability and cost of bank development finance.
Speaking today, Stewart Baseley, Executive Chairman at HBF said.
“This is a positive move. A lack of lending for individuals and businesses has been the main constraint on house building in recent years, making Britain’s housing supply crisis even more acute.
“However the success of the scheme is in the hands of the mortgage lenders. If they take advantage of the FLS and reflect its lower funding costs in lower mortgage rates, then we should see an increase in new home buyers. This in turn will bring a much-needed increase in economic activity and create tens of thousands of jobs across the country.”
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Notes to Editors:
The Home Builders Federation (HBF) is the representative body of the home building industry in England and Wales. HBF’s members account for some 80% of all new homes built in England and Wales in any one year, and include companies of all sizes, ranging from multi-national, household names through regionally based businesses to small local companies: www.hbf.co.uk
Permissions for fewer just 36,761 new homes were approved in Q1 2012 in England, compared with 40,000 in Q1 2010 and against a quarterly housing requirement of nearly 60,000 based on the Government’s household projections. In Q1 2006 over 60,000 permissions were granted by local authorities1.8 million families (5 million people) are currently on Local Authority waiting lists in England.FTBs aged between 22 and 29 have to save 45% of their take home pay every month for five years to afford a depositThe number of households is projected to grow from 21.7m in 2008 to 27.5m in 2033, a rise of 5.8m (27%), or 232,000 per year. (DCLG Household Formation Projections.)Jobs Calculator:Each home built creates 1.5 full-time jobs -Michael Ball reportIncreasing house-building by 130,000 units per year (to Government household projection levels) would create 195,000 jobs.HBF estimates twice that number of jobs are created in the supply chain – close to 400,000 jobs.Over the last three years, home builders have invested more than £1billion in shared equity schemes to help maintain housing construction whilst helping close to 30,000 first time buyers get a foot on the ladder.HBF’s Housing Market Report (May’11) shows that 91% of house builders now see the lack of mortgage availability as a ‘major constraint;’ on their ability to sell, and thus build, homesAccording to Government figures, even in its current crisis state, housing supply accounts for around 3% of UK GDP and provides between 1 and 1.25 million jobs in the UK.The number of new homes completed in England in 2010 slumped 13% on the previous year – itself the lowest peacetime number on record since 1923.18% of females and 29% males aged 20-34 still live with parents – ONS social trends - over 1 million women and 1.7 million men aged between 20 and 34 are still living at homeWhilst over 80% of people believe Britain needs more homes, particularly for first time buyers, only 50% of people would welcome more homes in their area - NHMB survey, Nov 2010.