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CBI demands govt measures to tackle housing crisis

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  • 11/11/2011
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CBI demands govt measures to tackle housing crisis
Business group the CBI has called on the government to address the housing crisis, saying a well functioning property market is vital to long-term economic recovery.

Its report Unfreezing the housing market said short- and long-term solutions are needed, with housing vital to the UK’s economy and infrastructure. It said the stagnation of house sales has accounted for a 6% drop in GDP during the recession.

In the short term, it recommended measures including:

  • supporting first-time buyers with low deposits by introducing a Mortgage Indemnity Guarantee (MIG) insurance scheme, provided on a risk-sharing basis by mortgage lenders and house builders, with government providing tail-risk guarantees
  • allowing first-time buyers to access a percentage of their pension savings at a low cost in order to increase their deposit. This would be repaid over their working life.
  • supporting homeowners in negative equity with specially designed products
  • ensuring the availability of development finance to small and medium-sized house builders
  • implementing planning rule changes for business-to-residential conversions, and consult on broader “change of use” rules

Long-term solutions suggested by the CBI include:

  • reducing “regulatory drag” on house builders to boost new build construction
  • ensuring that financial regulatory reform does not restrict the availability of mortgages
  • reviewing Stamp Duty to make it more “progressive”
  • ensuring that the government’s housing and sustainability objectives are aligned

John Cridland, director-general of the CBI, said: “Owning a home has been a natural aspiration for generations of Britons since the 1950s, and should not become the preserve of a lucky few.

“Without a steady stream of first and second-time buyers, the housing market freezes and the whole economy suffers.”

He added: “In the short-term, boosting activity in the housing market and construction sector could be a major game-changer for growth. Housing makes a significant direct contribution to economic output and job creation, and also has a big impact on business and consumer confidence and spending.

“We’re urging the government to deliver a comprehensive, long-term strategy to tackle the structural supply and demand failures in the housing market.

“This must include planning incentives to support housing developments, reducing the regulatory drag on house building, and, in time, reviewing Stamp Duty.”

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