Government to purchase new-build homes that fail to sell

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The government recently announced a £2bn construction fund to be used to assure new housing schemes by purchasing homes struggling to sell, reported in October 2016.

Sir Edward Lister, chairman of the Homes and Communities, speaking to Property Week, said that this money would minimise developer risks.

The unsold houses will be bought by the government then either sold on the open market, or to buy-to-let landlords in the rented sector. Mortgages with low-interest rates are available for both standard and commercial mortgages, so it is unlikely that the government will have difficulty selling the homes.

Lister said that the new fund was designed for large projects that can be built quickly. To encourage this, he is encouraging the development of modular construction where house sections are first built offsite.

Lister said:

“So it’s about us going to a housebuilder and instead of expecting the normal build-out rate of 50 units a year, we’ll say ‘we want you to build all 500 in one go and what we’ll do is guarantee to take them off you if you can’t find a buyer”

Lister also wants developers to use government-owned land and would consider deferring payments for the land until the houses are built. He explained:

“We’re really only interested in speed. It’s about how fast we can get the delivery through.”

If the new scheme is successful then it will mean that many more houses will be built to decrease the housing shortage.

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