Building for the future

A significant social issue of recent times is the lack of housing in the UK, and particularly the fact that an insufficient number of new homes are being built to meet the needs of the growing population. Estimates suggest that 200,000 to 250,000 houses need to be built each year in order to match population growth. However, in 2012, only 117,000 new-builds were completed. This short supply of homes has become a major social issue as the lack of supply when compared with increased demand serves to push up the costs of buying and renting. This has a significant impact on living standards as larger proportions of incomes are then being spent on rent or mortgages.

To deal with the issue, the government has launched a number of schemes over the past few years that aim to increase the number of new-builds. The focus can generally be divided between plans to give finance for house-building projects and plans to help buyers who can’t afford a deposit on a new home.

The two main initiatives that help buyers who can’t afford a large deposit are ‘Help to Buy’ and the ‘NewBuy Guarantee’. Help to Buy equity loans are available to purchasers of new-build homes worth up to £600,000. Under this scheme, the government loans property purchasers up to 20 per cent of the cost of a new-build home, so that they only need a five per cent deposit and a mortgage to make up the remainder; £3.5bn has been set aside to help up to 74,000 home purchases, and the scheme will end either when the funds are used up or at the end of March 2016…

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