The government is set to announce a new house building fund to the tune of £3bn, to provide developers with cheap loans to give the sector a boost following the Brexit vote.
Finance minister Philip Hammond, who has spoken about the need for a “fiscal reset”, is due to give the government’s official fiscal response to the June referendum in the autumn budget statement, though no date has yet been set.
The new fund is expected to combine a number of schemes which already exist, including a £1bn large sites infrastructure programme, and a £525m builders fund, as well as including new money, in order to encourage developers to build new homes.
It has been said that the fund will be targeted at small and medium-sized developers, and will offer cheap loans or financial guarantees. It is also aiming to reduce the red tape which has got in the way of previous schemes.
This is the biggest financial risk that the government has ever taken before in this sector, in a bid to “get Britain building”, and is possibly related to recent concerns that they are falling significantly short of their target to build 1 million new homes by 2020.
It has also been revealed that developers are sitting on planning permissions, rather than actually building the new homes, as figures suggest that permission has been granted fro 750,000 new home which have not been started.
Market data for the housing sector has been mixed, as official figures have shown construction output falling sharply in May and an industry survey showing that the referendum had an immediate impact on the housing market.
However, data published in July has indicated that the number of new homes registered for construction for the second quarter has risen to the highest since 2007.