Government unveil affordable homes plan

Plans to permit first time buyers to borrow up to 95% of the value of a new home, with the government underwriting part of the risk, are to be unveiled, in a bid to help more young people onto the housing ladder and raise funds to increase the supply of new build homes.

The new scheme for affordable homes in England, which will commence in June, is expected to unlock many mothballed housing schemes, creating around 16,000 new homes and up to 32,000 new jobs.

With the volume of new homes being built at the lowest level since World War II, the government is under pressure to increase the supply of much needed housing in England.

Official figures shows that just 121,200 new homes were made available in 2010-11, down 6% on the previous year.

Given that the government's planning system reform has so far failed to deliver the necessary volume of new homes needed, some critics have slammed the coalition government for failing to help housebuilders to increase the supply of new homes in England.

But housing minister Grant Shapps believes that the government is on the right track to help increase the supply of new homes, partly by making funding available for residential projects that have stalled due to a lack of finance.

Speaking on BBC Breakfast news this morning, Mr Shapps said: "What we want to do is to make it easier for first-time buyers who say the biggest problem is the amount of deposit we have to get together."

Speaking today, Stewart Baseley, executive chairman of the Home Builders Federation, said: "This is a great deal for people wanting to buy a new home, whether first-time buyers or existing home owners who are unable to trade up. In recent years many people have been unable to realise their dreams of buying a home because of the huge deposits required by lenders. This scheme will allow people to buy their new home on realistic terms and help in particular hard pressed first time buyers.

"It will also be a huge boost to housebuilding. Since 2007, the biggest constraint on homes being built has been mortgage availability. This scheme will see more desperately needed homes being built, create jobs and give the economy the boost it needs."